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:
Cherry Jalopies, Inc.:
mean = (0.22 + 0.11 - 0.04 + 0.06 + 0.09) / 5 = 0.52 / 5 = 0.104
variance = [(0.22 - 0.104)² + (0.11 - 0.104)² + (-0.04 - 0.104)² + (0.06 - 0.104)² + (0.09 - 0.104)²] / 5 = (0.013456 + 0.000036 + 0.020736 + 0.001936 + 0.000196) / 5 = 0.007272
standard deviation = √0.007272 = 0.085276 = 8.53%
Straw Construction Company:
mean = (0.16 + 0.23 - 0.01 + 0.01 + 0.17) / 5 = 0.56 / 5 = 0.112
variance = [(0.16 - 0.112)² + (0.23 - 0.112)² + (-0.01 - 0.112)² + (0.01 - 0.112)² + (0.17 - 0.112)²] / 5 = (0.002304 + 0.013924 + 0.014884 + 0.010404 + 0.003364) / 5 = 0.008976
standard deviation = √0.008976 = 0.09474 = 9.47%
Answer:
Chester Company
Explanation:
Niche Cost Leader Strategy is to set the price for the products as lower than all the competitor's products and still be in profit. Thus by having set the lower prices than competitor's products in the market and achieving profit for the organization.
Chester Company is the strong competitor for the Niche Cost Leader Strategy company based on the given information, and the data as explained below.
- There is very low change in the stock market price ($0.45) and very low variation in closing stock price for the Chester Company. This indicates that the company has stable market stock price.
- Chester has lowest margins (35.8%) and lowest profits $3,144,115, as compared to other companies where as sales is high ($158,062,285), which is close to other companies of high sale value (Andrew - $211,593,184)
- Profit of Chester is lowest as compared to other companies, though sale is good. This indicates that the product price is lower than others. Thus it is strong competitor for niche cost leader Strategy Company.
- Production for the Chester Company is very high against the capacity of the company.
Answer:
NONE
Explanation:
The BLS investment do not qualifies to use the equity-method as his percent of the comany's are below 20%
The investment will yield a gain for Leo when it distribute dividends and from the change in the market value of the share.
Their investment is valued at cost, it do not recognize gains for the company's income or losses.
