New contribution margin = $70 Break-even point in passengers = fixed costs/contribution margin Passengers = 45,000 Train cars = 715 e) Springfield Express has experienced an increase in variable cost per passenger to $ 85 and an increase in total fixed cost to $ 3,600,000. The company has decided to raise the average fare to $ 205. If the tax rate is 30 percent, how many passengers per month are needed to generate an after-tax profit of $ 750,000? Before Tax Needed Profit = $1,071,428.57 Before Tax Needed Contribution Margin = $4,671,428.57 Contribution Margin per Customer = $120 Number of Customers Needed = 38,928.57 Whole Number of Customers Needed = 38,929
HEALTHY SPRING WATER COMPANY DEFINING THE PRICE-VOLUME TRADEOFF FOR A 20% PRICE INCREASE The Healthy Spring Water Company sells bottled water for offices and homes. The price of the water is $20 per 10 gallon bottle and the company currently sells 2000 bottles per day. Following is the company's income and costs on a daily basis. Sales revenue $40,000 Incremental Variable cost $16,000 Nonincremental Fixed cost $20,000 The company is enjoying stable demand with its current pricing, but management is looking for ways to increase profitability. One suggestion is that the company reposition its water as a premium product, justifying a higher price.
Again, note that the actual state rate is reduced by 25% to allow for the deductibility of state income taxes on the federal income tax return. If Dana’s state tax rate increases to 10%, corporate bonds are still superior to Treasury bonds. 50. [LO 1] At the beginning of his current tax year David invests $12,000 in original issue U.S. Treasury bonds with a $10,000 face value that mature in exactly 10 years. David receives $700 in interest ($350 every six months) from the Treasury bonds during the current
Independent labels that order more than 100,000 CDs a year pay approximately $.65 per CD. Labels that buy less than 10,000 CDs a year pay approximately $1.20 per CD. These costs include the printing of 4-page package inserts and tray cards. Royalty Costs Record labels pay two royalties: The first is a record royalty to the performing artist(s); the second is a mechanical royalty to composers and publishers. Some companies pay record royalties on a percentage (8% to 16%) of the suggested list retail price (SLRP) less a packaging cost, generally 15% to 25% of the SLRP.
Healthy Foods Inc. 1 Healthy Foods Inc. Robert Johnson FIN /200 - Introduction To Finance: Harvesting The Money Tree 8/12/2011 Instructor: Joseph Lane Healthy Foods Inc. 2 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? $80, 000 $80,000 BE = $10-$5 = $5 = 16,000 bags b.
Introduction of generics in 1981 by Liggett (1) Generics have increased in market share a. due to recession most significant increase was 1991-1992 c. RJR, Morris’s major competitor, began making house brand generics (1) Sold for up to a dollar cheaper than name brands a. Cheaper tobacco used b. Less advertising fees (2) RJR largest market share in generics (3) Cut prices due to competition from American Tobacco and Brown & Williamson 2. Possible Solutions: Solution A: Maintain the current pricing and utilize coupons to reduce the cost by forty (40) cents per pack. (1) Coupons could be placed inside of the cigarette package redeemable for the next pack purchased.
This wine will be sold for an amazing price of 130 euro, in Europe alone to start with, in three tranches to maximize profit potential. The first year 75% of the cases will be sold, the second year 20% of the cases and the third year the last 5%. These tranches will stay the same with the 2010 and 2011 tranches. Selling will be done by a newly hired ambassador, which will operate together with the existing European ambassador to ring back Bordeaux wines to restaurants and the traditionalists who left Bordeaux wines behind them. Improving and acquiring new customer relationships is something that will have great affect on the success of Margaux du Château Margaux.
1 - What sales volume is required to break even on Classic Knitwear's 2-year marketing investment? Licensing fee - $100,000 (Year 1) (5% of net sales after Year 1) Licensing Fee2 = (N/2)*.05* gross margin (Assuming N is spread evenly) Salary = $255,000 per year (3 salary employees) $510,000 for two years Total Marketing Investment = $3 million for two years (In part Advertising = $1.2 million total for 2 years) Total Fixed Costs = $3,610,000 + Licensing Fee2 Average Manu Cost per case = $428.88 (5% off-invoice trade promotion) Average Manu Cost per case w trade promo = $407.44 (20% orders receive 10% advertising allowance) Average Manu Cost per case w trade promo and allowance = $364.55 Average cost for display [6 cases w promo inc] = ($407.44 * 6) + $100 = $2,544.64 Average cost for display [above with adv promo] = ($364.55 * 6) + 100 = $2,287.30 N = Total displays needed Total Fixed Costs + Licensing Fee2 = 0.80($886.56 * N) + 0.20($629.22 * N) + ($100 * N) = 709.248N + 125.844N + 100N $3,610,000 + [(0.05*7.05)/2] N = 935.092N $3,610,000 = 935.092N – 0.17625N $3,610,000 = 934.91575N N = 3,861.31, so 3,861 displays needed to break even (555,984 average amount of shirts) 2 - If Classic Knitwear implements all of Miller's marketing recommendations, what is the estimated demand for the new product line over the 2-year launch period? Remember that Miller's expectations when forecasting will be influenced by his prior experience. Tip a: Breakeven Point = Fixed Costs/(Unit Selling Price - Variable Costs). Tip b: Unit Contribution Margin = Unit Selling Price - Variable Costs.
Which of these checks his calculation? A B C D 9.80 – 4 = 120 0.05 9.80 – 5 = 120 0.04 9.80 – 5 = 120 0.4 9.80 – 4 = 120 0.5 26 A bottle of grape juice contains 75 centilitres. This is enough to fill 6 small glasses. 1 litre = 100 centilitres How many of these small glasses will 3 one-litre juice cartons fill? A B C D 18 24 38 50 Key skills application of number | Adult numeracy | Level 2 | March 2004 13 27 A DJ charges an attendance fee of £50, plus £7.50 per hour for playing party music.