Answer:
$24,000
Explanation:
Product A Product B Product C
sales 70,000 97000
Variable cost 37000 51000
Contribution margin 33000 46000
Avoidable cost 10,000 20000
Unavoidable cost 7000 12000 9400
Operating income 16000 14000
Total operating income if product C is dropped is (16000+14000 +3400-9400)
=$24000
Please note that Giant company with still incur the unavoidable cost even if the product is dropped. This is assumed to be a portion of the fixed overhead expenses allocated to the product in the course of normal operation.However , the loss made of 3400 will be avoided as well
Answer:
1.2
Explanation:
current ratio = current assets / current liabilities
- current assets = cash ($5,000) + accounts receivable ($15,000) + inventory ($40,000) + prepaid insurance ($3,000) = $63,000
- current liabilities = accounts payable ($15,000) + notes payable in 5 months ($12,500) + salaries payable ($25,000) = $52,500
current ratio = $63,000 / $52,500 = 1.2
The demand for air travel between two cities doubles. The elasticity of the supply of air travel between these cities will <span>become more elastic, the longer the time since demand doubled</span>. Elasticity is the responsiveness between supply or demand when nothing changes but the price. In this situation, the demand for air travel between two citifies doubled, so, the traveling is elastic because even though the demand rose, so did the price, but the demand didn't start to drop.
Answer: $40
Explanation:
First find the required return using CAPM;
Required return = Riskfree rate + beta * (Market return - riskfree rate)
= 6% + 0.5 * (13% - 6%)
= 9.5%
Then use DDM to determine intrinsic value;
= Next dividend / (Required return - growth rate)
= 5 / (9.5% - (-3%))
= $40
