Answer:
A particular product line is most likely to be dropped when:
- its total fixed costs are more than its contribution margin
- its variable costs are more than its fixed costs
- its unavoidable fixed costs are more than its contribution margin.
Explanation:
The aim of every producer is to maximize profit and to make this possible, the cost of producing a particular product should fall below the contribution margin.
In the case that the gross profit is always negative due to high cost of production, further production should be discouraged.
The decision to drop a particular product line is usually reached when:
- Its total fixed costs are more than its contribution margin: Here, the company will run at a loss. It is sustainable to continue production..
- Its variable costs are more than its fixed costs: This is also an unfavorable situation that does not sustain mass production. Therefore, further production should discontinue.
- its unavoidable fixed costs are more than its contribution margin: At this rate, profit cannot be maximized. It is a lose-lose situation for the company.
Answer:
False
Explanation:
Correlation tells you if there is association between two or more variables. Regression analysis model allow you to predict one variable from the other.
Answer: Jensen shipping's equity multiplier at year-end is 1.80
We arrive at the answer as follows:
Sales $711,000
Profit Margin 5.2% of sales
Since Profit margin generally refers to net profit margin after tax, we don't consider the tax values in the question.
Net Profit in $ 
less: Dividends <u>-12,500 </u>
Additions to Retained Earnings 24472
Add: Beginning Owner's Equity <u>362400</u>
Ending Owner's Equity 386872
The formula for Equity Multiplier is :
Plugging in the values we get,
The cost of goods sold for the year is $500.
Since FIFO method is to be used, the cost of goods sold for the year should be the cost of its first purchase regardless of when the product is actually bought. Thus, the cost of goods sold for the year is $500 ($500 × 1).
