<span>She should apply the same principles that would be applied to any other employee. To do otherwise would be to run afoul of the entire ethos of the company. It would set a bad example for the employees and would cause those in management to lose respect (and possibly lead to some sort of ethical investigation by those with the proper authority to do so).</span>
Answer:
(a) Continue to operate.
(b) Shut down
(c) Continue to operate.
Explanation:
(a) It is given that the firm will experiencing a loss of $5000. Therefore, it means that a loss of $5,000 is borne by the producer of the fixed cost. It is a portion of fixed cost but the firm will continue to operate in the short run if it covers all of the variable cost in the short run.
(b) The firms in the long run try to cover all of its variable and fixed cost. If this situation persists then this firm unable to cover its all costs. Therefore, the firm will shut down its operation and go out of the business.
(c) Now, if the firm’s fixed costs are $2,000.
There is a reduction in the fixed cost by $6,000
Previously firm able to cover = $8,000 - $5,000
= $3,000
It means that it cover its fixed cost and hence, the firm will operate in both short run and long run.
Answer:
The operating Income should increase by about 59.0%.
Explanation:
Degree of Operating Leverage = % Change in EBIT / % Change in Sales
5.9 = % Change in EBIT / 10%
% Change in EBIT = 5.9 * 10% = 59.0%
Answer:
Total factory overhead to be charged to each unit of Hooks is $33
Explanation:
Sum of all Activity Cost = Total Factory Overhead
Calculate the total factory overhead to be charged to each unit of Hooks
Activity rate = Budgeted amount / Total of each activity base
∴ Activity Rate
For Setups = 60,000 / 20,000 = 3 per setup
For Inspections = 120,000 / 24,000 = 5 per inspections
For Assembly = 420,000 / 28,000 = 15 per dlh
Activity Cost = Activity base for each unit * Activity rate
∴ Activity Cost
For Setups = 1 x 3 = $3
For Inspections = 3 x 5 = $15
For Assembly = 1 x 15 = $15
Recall that;
Sum of all Activity Cost is the Total Factory Overhead
= $3 + $15 + $15
= $33
Answer:
b. -$350,000
Explanation:
The calculation of net cash used in financing activities is shown below:-
Net cash used in cash flow from financing activities = Borrow from bank - Dividend paid + Issue common Stock - Loan repaid
= $1,250,000 - $1,200,000 + $500,000 - $900,000
= -$350,000
Therefore for calculating the net cash used in financing activities we simply applied the above formula.