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Black_prince [1.1K]
2 years ago
10

A manager in your organization just received a special order at a price that is "below cost." The manager points to the document

and says, "These are the kinds of orders that will get you in trouble. Every sale must bear its share of the full costs of running the business. If we sell below our full cost, we'll be out of business in no time." What do you think of this remark?
Business
1 answer:
Alex777 [14]2 years ago
5 0

Answer:

So, from a short-run perspective, so long as the sale does not affect other output prices or normal sales volume, a "below cost" sale may result in a net increase in income so long as the revenues cover the differential costs.

However, in the long run all costs must be covered or management would not reinvest in the same type of assets.

If the company must continually sell below the full cost of production then it will most likely get out of that particular business when it comes time to replace those facilities.

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Delta Company sells bells to customers for $1 each. The variable cost to manufacture the bells is 10 cents. If the rattle depart
ale4655 [162]

Answer:

Option C. $0.11

Option D. $0.95

Explanation:

As we know that the Transfer Price is set at either selling price for an outside market or variable cost plus opportunity cost if the product sold is to internal market present within the organization (Inter group or inter division sales).

However, the division can still charge upper limit price to the division which is $1 market price of the product.

Upper limit = $1

As it is given that the selling of the additional units will be among divisions which means its inter division market. Hence the lower limit will be used here.

Lower Limit = Variable cost + opportunity cost

Here

Variable cost is $10 cents

And

Opportunity cost will be zero here as the division will be using its excess capacity to sell to the other division, so there is no opportunity cost.

So, by putting values, we have:

Lower Limit = $0.1 - $0 = $0.1

Upper limit = $1

Thus the transfer price set for each bell can be between $1 and $0.1. So the $0.11 and $0.95 falls between these range and both are correct options here.

4 0
2 years ago
Grand Gimmicks Company produces a single product with a current selling price of $170. Variable costs are $130 per unit, and fix
kobusy [5.1K]

Answer:

Break Even Sales Volume in Dollars=  $ 19500

Explanation:

Break Even Sales Volume in Dollars= Fixed Costs/ Contribution Margin Ratio

Break Even Sales Volume in Dollars= Fixed Costs/ 1- (variable Costs/ Sales)

Break Even Sales Volume in Units = Fixed Costs/ Contribution Margin per Unit

Break Even Sales Volume in Dollars= Fixed Costs/ 1- (variable Costs/ Sales)

Break Even Sales Volume in Dollars= $6,240/1-(130/190)

Break Even Sales Volume in Dollars= $6,240/1-0.68

Break Even Sales Volume in Dollars= $6,240/0.32

Break Even Sales Volume in Dollars= $ 19500

8 0
2 years ago
Read 2 more answers
Assume that an MNC purchases a foreign building, and then leases the building to another party and allows that party to operate
Citrus2011 [14]

Answer:

The correct answer is letter "A": A foreign acquisition.

Explanation:

In corporate terms, a foreign acquisition is the purchase of a company or the division of a company. Some acquisitions are paid in cash while others are paid with a combination of cash and the acquiring company stock or even financed with debt which is called a leveraged buyout.  

Foreign acquisitions are often done by another company in a similar line of business who wishes to use the purchased business to improve its own operations.

8 0
2 years ago
An instruction to a securities agent to sell a stock when it reaches a specific price is a ________. short sell market order lim
mr_godi [17]
An instruction to a securities agent to sell a stock when it reaches a specific price is a stop loss order.
5 0
2 years ago
What is the main disadvantage of moving to e-moneyLOADING... or moving to a cashless​ society? A. Funds are debited too quickly
Nady [450]

The correct answer is D) There are problems with security and privacy.

The main disadvantage of moving to e-money LOADING... or moving to a cashless​ society is "There are problems with security and privacy."

Technology has brought many advantages to the way people do business, facilitating transactions, bank payments, deposits, and many more functions. However, it also has risks and disadvantages. The most important risk that has already affected thousands of people is the security and privacy of data.

There have been cases such as the clients of Target supermarket that suffered from stolen information and hackers used their credit cards to make purchases. Private concerns of data uploaded on social media sites such as Faceb*ok have been used to other purposes and the President of this company had to testify members of the US Congress.

7 0
2 years ago
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