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2 years ago

Superb Ltd. Is a well diversified company engaged in development of real estate, tourism and

Business

1 answer:

Fittoniya [83]2 years ago

8 0

Answer:

Since the company's debt level is very low, then it should probably issue new debt. The advantage of issuing debt is that debt is always cheaper than equity. E.g. the company issues a bond with a 10% coupon rate and the corporate tax rate is 30%. The after tax cost of debt = 10% x (1 - 30%) = 7%.

Issuing bonds with a 10% coupon rate is not something impossible, and actually the interest rate is pretty high. Some companies issue bonds at 4 or 5%. But to raise new capital offering a return on equity of 7% or less is extremely odd and difficult. Generally, the cost of equity of normal corporations tends to be about twice as higher as the cost of debt.

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Ehrling, Inc., manufactures metal racks for hanging clothing in retail stores. Ehrling was approached by the CEO of Carly’s Corn

Free_Kalibri [48]

Answer:

additional revenue = $26,250

relevant costs:

direct materials =350 x $82 = $28,700

direct labor = 525 x $15 = $7,875

setup hours = 1 x $5 = $5

inspection costs = 20 x $5 = $100

machining = 175 x $3 = $525

total relevant costs = $37,205

1) change in income if order is accepted:

total revenue - total relevant costs = $26,250 - $37,205 = -$10,955

the company will incur in $10,955 in losses if order is accepted.

2) if direct materials are reduced by $13 per unit = $13 x 350 = $4,550, and direct labor costs can be reduced by 0.5 x 350 = 175 hours (= 175 x $15 = $2,625) ⇒ total relevant costs will decrease by $7,175.

It is now a $3,780 (= $10,955 - $7,175) loss if the special order is accepted.

8 0

2 years ago

Big Red Company, a manufacturer of computer hardware components, uses direct labor cost to allocate its production overhead. In

aliina [53]

Answer:

Option C is correct.

Explanation:

Big Red Company allocates $12.50 per direct labor hour as the standard rate and uses direct labor cost to allocate its production overhead.

However, he setup time for SATA is three times as long as the setup time for SCSI although SCSI and SATA drives take the same time to produce.

This shows that SATA carries less than its full share of factory overhead.

4 0

2 years ago

Use the following list of accounts for Milner's Star Express Cleaning Service. Cash $2,026 Fees Earned 13,835 Accounts Payable 7

Marysya12 [62]

Answer:

Milner's Star Express Cleaning

Income Statement For the Year Ended December 31, 20--

Fees Earned 13,835

Utilities Expense 153

Rent Expense 1,200

Wages Expense 1,650

total expenses 3,003

net income 10,832

Explanation:

We will subtract the expenses account from the fees earned to get net income

The other accounts will be ignores as they are not used in the calculations for the net income

3 0

2 years ago

A nursing facility has a gross income of $486,000, fixed expenses of $300,000, and variable expenses of $150,000. what is the ap

Tcecarenko [31]

Based on the information provided:

Gross income is $486,000

Fixed expenses: $300,000

Variable expenses: $150,000

To find the percentage of gross profit first figure out the difference between the gross income and expenses which is: $486,000 - $300,000 - $150,000 = $36,000 then divide the gross income by the profit 486,000/36,000 and the answer is 13.5%.

7 0

2 years ago

A blue-ocean strategy: A). is an offensive strike employed by a market leader that is directed at pilfering customers away from

mixas84 [53]

Answer: The correct answer is D).

Explanation: A blue ocean strategy is used to gain a broad and durable competitive advantage by abandoning existing markets and inventing a new market segment in which competitors are minimal and allow the company to meet a new demand.

7 0

2 years ago