Customer Analysis The total industrial consumption of cyano-acrylates which the new Bond-A-Matic 2000 would dispense was 265,000 pounds in FY 1978, expected to grow to about 335,000 pounds in FY 1979. Across 16 SIC categories, approximately 174,909 firms currently used cyano-acrylates (at a 15.5% market penetration.) 11% of CA users, i.e. approximately 19,240 firms used over 10 pounds of CAs per year, comprising at-least 75% of total current market. Assuming that growth in the CA segment stagnates, and that only heavy CA applicators would be interested in dispensing equipment the total market is still estimated at 19,240 users.
The manager cited the resulting high depreciation charges as the justification for the price boost. He asked the president of the company to instruct Division P to buy from S at the $220 price. He supplied the following information: P's annual purchases of component 2,000 units S's unit and batch-related costs per unit $190 S's capacity related costs per unit $20 S's required return on investment $10 Suppose there are no alternative uses of the S facilities. Required 1) Will the company as a whole benefit if P buys from the outside suppliers for $200 per unit? 2) Suppose the selling price of outsiders drops another $15 to $185.
1. Question: (TCO4) In a merchandising business, gross profit is equal to sales revenue minus: Your Answer: Instructor Explanation: Merchandising companies are those that buy products and resell them to the end consumer, so the cost of the product sold is usually their largest cost. Their income statement should start with revenues minus cost of goods sold equals gross profit. Points Received: 5 of 5 Comments: 2. Question: (TCO4) BMX Co. sells item XJ15 for $1,000 per unit, and has a cost of goods sold percentage of 80%.
Eisenhower communications is trying to estimate the first-year net operating cash flow (at year 1) for a proposed project. The financial staff has collected the following information on the project: Sales revenue $10 million Operating costs (excluding depreciation) $ 7 million Depreciation $ 2 million Interest expense $ 2 million The company has a 40 percent tax rate, and its WACC is 10 percent a. What is the project’s operating cash flow for the first year? b. If this project would cannibalize other projects by $1 million of cash flow before taxes per year.
Healthy Foods, Inc., sells 50-pound bags of grapes to the military for $10 a bag. The fixed costs of this operation are $80,000, while the variable costs of the grapes are $.10 per pound. a. What is the break-even point in bags? Unit Contribution Margin (UCM) = Price – Variable Cost = $10 – (50 × $0.10) = $10 - $5 = $5 BEP in bags = [pic][pic] = [pic] = 16,000 bags b.
Such as a suit store will have ties selling at ten dollars per unit, shirts at thirty per unit, paints and so on, this is an example of sales mix. The formula illustrated in chapter 6-12, as I show above, which uses unit selling price minus unit variable costs equals contribution margin per unit. if you use this formula and if you increase the unit selling price you will have a higher contribution margin per unit. An example of this is; if my company DL inc. sells dishwashers at eight hundred dollars per unit and its variable cost per unit is three hundred dollars , how much it cost to make, my contribution margin is five hundred dollars. So if I raise my dishwashers sales from eight hundred dollars to nine hundred I will increase my contribution margin by a hundred dollars.
(This is the actual growth rate.) If Dell’s operation in fiscal 1996 were to repeat the fiscal 1995 operation what would be the external financing needs? Compare your forecast to the actual performance in fiscal 1996? • $390M • My asset forecast is $90M higher • My net income is 15% lower ($41M) 3. Assume that Dell will grow 50% in fiscal 1997.
To drive both market share and earnings Kodak proposed to introduce a new brand “Funtime” at Fuji and Konica’s price level, setting it 20% below the price of Kodak’s flagship Gold Plus brand. It is believed that other “price brands” on average are about 30% less than Kodak Gold Plus. With no advertising support, the Funtime would be sold twice a year at off-peak film use times and available in limited quantities, packaged only in “value packs”. Gold Plus would remain flagship brand with 60% of the dollar advertising support. Royal Gold would be the new name for the products in Superpremium segment with recommended retail prices at 20% above Gold Plus.
The bonds mature in 10 years. The firm’s average tax rate is 30% and its marginal tax rate is 34%. b. A new common stock issue that paid a $1.75 dividend last year. The par value of the stock is $15, and earnings per share have grown at a rate of 8% per year.
3. Tiger’s Mineral Springs, an unregulated monopoly, faces the following demand schedule for bottled mineral water: QD = 20 - 2P where P is the price per bottle measured in dollars, and Q is the quantity measured in ‘000 bottles Tiger’s marginal cost is $4 a bottle – (assume that marginal cost is constant for this firm. Also assume fixed costs of $4000. (a) Sketch the demand, marginal revenue (MR), average variable cost (AVC) and marginal cost (MC) curves for the firm. (b) Based on your diagram, determine Tiger’s profit-maximising output and price, and the associated level of profit or loss.