Answer:
$13,200 per year
Explanation:
Amount incurred to improve the office space = $
Improvement expected to yield benefit = 10 years
Remaining life on it's lease = 8 years
Since the office space is not going to remain with Phoenix after the lease period, it means that the improvement expenses will be expensed over the remaining lease period I.e 8 years.
Therefore, the amount of expense that should be recorded the first year related to improvements can be calculated as;
= Amount incurred to improve the office space ÷ remaining life on its lease
= $105,600 ÷ 8
= $13,200 per year
An executive's company requires her to engage in a lot of long-distance travel. At first, after a long trip she would experience fatigue, uncontrollable sleepiness, and a disruption of her sleep-wake schedule that would continue for days. She probably was experiencing
Answer: Jet lag
Explanation:
Jet lag is a temporary sleep disorder that affects individuals who can travel across several time zones. In this case, the internal clock of the body doesn't conform to the new time zone thereby leading to a sleeping disorder.
An executive's company requires her to engage in a lot of long-distance travel. At first, after a long trip she would experience fatigue, uncontrollable sleepiness, and a disruption of her sleep-wake schedule that would continue for days. She probably was experiencing jet lag.
Answer:
Jet lag
Explanation:
Jet lag is a sleeping disorder that occurs when a person's internal clock is out of sync with a new time zone they travel to.
It occurs when people travel quickly accross time zones.
For example if one is used to sleeping every 12 hours and he travels accross 6 hours time zone, he will be feeling sleepy when there is daylight in the new location.
In the given scenario the executive is experiencing jet lag in form of fatigue, uncontrollable sleepiness, and a disruption of her sleep-wake schedule that would continue for days.
All else constant, what would Chester’s SG&A/Sales ratio be if the company had spent an additional $1,500,000 for Crimp’s promotional budget and $750,000 for Crimp’s sales budget? Select: 1Save Answer 10.7% 9.2% 12.8% 12.2%
Answer: 11.7%
Explanation:
The current Selling, General and Administrative Expenses are the Promotions, Sales, Admin and R&D costs.
If the company spent an additional $1,500,000 for promotion and $500,000 for sales the total would be;
= 1,500 + 500 + 2,824 + 5,200 + 6,000 + 1,404
= $17,678,000
The SG&A/Sales ratio is;
= 17,678,000/ 151,411,000
= 0.116755
= 11.7%
Chester’s SG&A/Sales ratio be 11.7% in the case when the company had spent an additional $1,500,000 for Crimp’s promotional budget is 11.7%.
Calculation of the SG&A/Sales ratio :
First the cost is
= 1,500 + 500 + 2,824 + 5,200 + 6,000 + 1,404
= $17,678,000
Now
The SG&A/Sales ratio is;
= 17,678,000/ 151,411,000
= 0.116755
= 11.7%
hence, we can conclude that Chester’s SG&A/Sales ratio be 11.7% in the case when the company had spent an additional $1,500,000 for Crimp’s promotional budget is 11.7%.
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Nora is interested in a career in human resource management. She expected her first job to focus on giving employees access to information and enrollment forms for training, benefits, and other programs. However, she has since learned that HR employees spend less time doing that kind of work. Which trend is behind that change
Answer:
employees can now get such information through self-service
Explanation:
The trend behind this change is that, employees can now get such information through self-service. Human resource Employees spend less time doing such work now because such information is readily available on the internet and can be accessed by any employee at anytime that they want to do so on their own.
Hayim Accardi is the accounting manager for a small, local firm that has full- and part-time staff. How do FLSA guidelines regarding working hours apply to Hayim's employees?
Answer:
The answer is below
Explanation:
According to a Fair Labor Standards Act, FLSA, guidelines regarding working hours apply to Hayim's employees in the following ways:
1. All the workers, (either full time or part-time) is entitled to remuneration based on minimum wage.
2. All the employees should work based on the guideline regarding maximum hours
3. The minimum age is applicable to all the employees
4. Remuneration of the employees must be based on the applicable Pay rates
5. There must be mandatory break periods for all workers, regardless if it is full time or part-time workers.
Discuss the corporate control of your business. Explain why your business in Mexico is exposed to agency problems
Answer:
Corporate Control and Agency Problems
For instance, Mr. Jones has a business in Mexico and hires professional managers, but he cannot be there to control their actions always. There are lots of agency problems because of the conflict of interests that is prevalent and the inexistence of goal congruence.
His corporate managers are his agents, as the stockholder. However, most times, these managers do not run the businesses they are entrusted with fiduciary duties in the best interests of Mr. Jones or the principals who appointed them to the positions. They carry out their own agendas and try to satisfy their selfish interests.
Explanation:
Is there any wonder Mr. Jones' business in Mexico is exposed to agency problems? The managers who are your agents will never, at all times, protect your interests in the business. They try as much as possible to satisfy their own interests. Where there is no goal congruence, managers will always expose their principals to agency problems. To curtail these problems, Mr. Jones and the other stockholders must devise means to align the interests of the managers with those of the stockholders. One of the ways of achieving this is through stock compensation and the limitation of compensation in cash.
The cash flow statement categorizes like transactions for optimal reporting. Identify each of the following transactions as one of the following:
• Operating activity (0) • Investing activity (I)
• Financing activity (F)
• Non-cash investing and financing activity (NIF)
• Transaction that is not reported on the statement of cash flows (N)
For each cash flow, indicate whether the item increases (+) or decreases (-) cash. The indirect method is used to report cash flows from operating activities.
a. Loss on sale of land. i. Cash sale of land.
b. Acquisition of equipment by issuance of note payable.
c. Issuance of long-term note payable to borrow cash.
d. Payment of long-term debt.
e. Depreciation.
f. Acquisition of building by issuance of common stock.
g. Purchase of treasury stock.
h. Increase in Salaries Payable.
i. Issuance of common stock.
j. Decrease in Merchandise Inventory.
k. Increase in Accounts Payable.
l. Increase in Prepaid Expenses.
m. Net income.
n. Decrease in Accrued Liabilities.
o. Payment of cash dividend.
Answer:
a. Operating activity (0) , decreases (-) and Investing activity (I), increases (+)
b. Non-cash investing and financing activity (NIF)
c. Financing activity (F), increases (+)
d. Financing activity (F), decreases (-)
e. Operating activity (0), increases (+)
f. Non-cash investing and financing activity (NIF)
g. Financing activity (F), decreases (-)
h. Operating activity (0), increases (+)
i. Financing activity (F), increases (+)
j. Operating activity (0), increases (+)
k. Operating activity (0), increases (+)
l. Operating activity (0), decreases (-)
m. Operating activity (0), increases (
n. Operating activity (0), decreases (-)
o. Financing activity (F), decreases (-)
Explanation:
The Indirect method reconciles the Operating profit to Operating Cash Flow by adjusting the Operating Profit with (1) Non Cash Items previously added or deducted from Operating Profit and (2) Changes in Working Capital items.
The Operating Activities - Shows cash flows resulting from ordinary course of trading
The Investing Activities - Shows cash flows resulting from sale or acquisition of items of Property, Plant and Equipment.
The Financing Activities - Shows Cash flows resulting from sources of funding and the repayment of debt capital.
The cash flow statement is the type of financial statement being used by the investors and managers who take various decisions for investment or for the budgeting of a new project.
It is prepared either by direct or indirect method.
The cash flow statement by the indirect method segregates the business activities into three categories:
The operating activity: it records the net income incurred in the particular year and also the adjustments to the net income and changes in the working capital of the business.The financing activity: it records the changes in the financial position of the business such as due to dividend, common stock, and shares.The investing activity: it records the changes in the value of fixed assets of the company such as sale and purchase of land or building.For each transaction, the cash flow activities will be affected as shown in the image attached below.
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Just then Calvin, the fit CEO, comes jogging into the room with a water bottle in hand. He spots the donuts and shows his disgust.) Calvin: Why do people inflict such nasty, sugar-coated poison on all of us?! A healthy workplace is a happy workplace. (He takes both boxes of donuts, puts them in a small, dirty, battered trash can and steps on them to squash them down, making them suddenly inedible. He smiles at everyone as if they all agree that he has done them a great service.) That's my job as CEO, to help everyone realize a long and happy life! Cheers! (He runs from the room as everyone looks on in stunned silence. After a couple of seconds Bob collapses on the floor next to the garbage can, looking at the destroyed donuts as if they were a long-lost love.)A. Legal realism school of thought.B. Sociological school of thought.C. Command school of thought.D. Law and economics school of thought.
Answer: C. Command school of thought.
Explanation:
The Command School of thought reflects the perspective that rules and laws were simply made by the elite and ruling class to control the rest of society.
This can be seen as Calvin who is the CEO and therefore in the ruling class, imposed his rules of not eating "sugar-coated poison" in the workplace on Bob as well as the rest of the employees who can be considered as non-elite members of the company/society.
He essentially made a rule and expected everyone to follow it thereby giving credence to the Command school of thought.
1) Consider the market for underground bunkers, Zombie movies have caused a spike in demand. Jennifer's construction company has built 50 bunkers so far this year at a total cost to the company of $8 million. If the company builds a 51st bunker, its total cost will increase to $8.18 million. What is the marginal cost of the 51st bunker?
Answer:
2. Marginal cost is the additional cost to produce 1 more unit
Total cost of 50 bunkers= 8000000
Total cost of 51 bunkers= 8180000
So, marginal cost of the 51st bunker 180000
The market for underground bunkers, Zombie movies have caused a spike in demand. The marginal cost of the 51st bunker is $ 180000.
What do you mean by the marginal cost?The difference in total production costs caused by creating or producing one extra unit is known as the marginal cost in economics.
Divide the variation in production costs by the variation in quantity to determine marginal cost.
Finding the point at which an organization can realize economies of scale to improve production and overall operations is the goal of marginal cost analysis.
Here,
Calculation of Marginal cost:
Marginal cost is the additional cost to produce 1 more unit
Total cost of 50 bunkers = 8000000
Total cost of 51 bunkers = 8180000
So, marginal cost of the 51st bunker 180000
Therefore, the market for underground bunkers, Zombie movies have caused a spike in demand. The marginal cost of the 51st bunker is $ 180000.
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A constraint with a positive slack value will have a positive dual price. will have a negative dual price. will have a dual price of zero. has no restrictions for its dual price.
Answer: will have a dual price of zero
Explanation:
In a problem relating to optimization, a slack variable is simply referred to a variable which can be added to the inequality constraint so that it'll be changed to an equality.
It should be noted that when a slack variable is introduce, the inequality constraint will have to be replaced by an equality constraint. A constraint with a positive slack value will have a negative dual price of zero.
There are some constraint that often affect the value of commodities. A constraint with a positive slack value will have a dual price of zero.
The value of the dual price for a constraint can have a positive slack value. When the slack variable value is zero, its dual value which is also called the shadow price is known to be positive.When the dual value is 10, it implies that the objective function value will increase by 20, when the right hand side value of the corresponding constraint improves by 2 units.
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Costume jewelry is produced in a monopolistically competitive market. One producer finds that MR = MC = $3 when output is 700 necklaces. An economist studying this information can conclude that ___________
Answer: the producer will charge a price that is more than $3.
Explanation:
Monopolistic competition is an industry characteristics whereby there are several firms that sell goods or services that can't be called perfect substitute but are identical.
Based on the above information, since marginal revenue and marginal cost equals $3, the producer will charge a price that is more than $3. This is necessary to cover up its cost.
The time value of money focuses on: Group of answer choices Cash flow Earnings per share Net income All of the above
Answer: cash flow
Explanation:
The time value of money is simply the idea that the money that an individual has now is worth more due to the potential earning capacity it has than giving an individual the exact amount in the future. The basic idea here is that since money can earn interest, money gotten today is worth more.
It should be noted that the time value of money actually focuses on cash flow and not warnings per share or Net Income.
With regard to New United Motor Manufacturing, Inc. (NUMMI), why did General Motors (GM) enter into a strategic alliance with Toyota?
Answer:
to learn the lean manufacturing system pioneered by Toyota
Explanation:
The main reason for this strategic alliance was in order for General Motors to learn the lean manufacturing system pioneered by Toyota. The lean manufacturing system is a methodology derived from Toyota's 1930 operating model "The Toyota Way" which focuses on minimizing waste within manufacturing systems while at the same time being able to maximize productivity. This provides a great benefit to any manufacturing company, hence why General Motors was interested.
Which type of a person demonstrates trustworthiness?
a person who always acts according to principles
a person who always does what is right
a person who always speak the truth
a person on whom you can rely
Answer:
a person on whom you can rely
Explanation:
it's the correct answer
Answer: a person on whom you can rely
Explanation:
Got it right
Explain the shift from artisan to factory worker, and discuss the factory system. What were the advantages and disadvantages
Explanation:
Note that an artisan is a person who uses his craftsmanship or craftswomanship to create products on a small scale that provide a small source of income. This shift occurred back in history during the Industrial Revolution which brought about so many inventions leading to a change in the production process. As the production process became more and more automated, former artisans became factory workers.
Advantages:
artisans were introduced into using efficient production equipment.artisans earned paid employmentDisadvantages:
remaining artisan workers could no longer compete becauseof the mass production ongiong in factories.factories became less concerned about the quality of goods, but of quantity.in which form of business ro the members of an organization own and control its activities
Answer: Partnership is the form of business in which the members of the organization owns and control its activities. They directly oversee the operations of the business and has direct involvement towards the day to day activities of the business.
Explanation:
Barrett, Inc., has a total debt ratio of .61, total debt of $321,000, and net income of $39,750.
What is the company’s return on equity?
Answer:
7.55%
Explanation:
The debt ratio shows the percentage of a company's assets that are provided via debt. It is the ratio of total liabilities to total assets, it is given by the equation:
Debt ratio = total liabilities/total assets
Given that total debt of $321,000, hence the total liability = $321000, and debt ratio = 0.61. Therefore:
Debt ratio = total liabilities/total assets
0.61 = $321000/total asset
total asset = $321000/0.61
total asset = $526230
Net income = $39,750, the company’s return on equity is given by:
Return on equity = Net income / shareholder equity
Return on equity = $39750 / $526230
Return on equity = 0.0755
Return on equity = = 7.55%
Delineate and describe the difference between measuring human performance and task completion.
Answera and Explanation:
Measuring human performance and task completion differ by degree of complexity and what is generally considered in measurement. in measuring human performance, there is broader perspective and metrics such as task completion, work ethics of employee, employee's overall contribution to organizations success is considered. In the case of task completion, the employees are assigned tasks and are given deadlines to complete them. Tasks are measures by systems put in place to measure employees task completion. Tasks completions begin and end with tasks and nothing more. Human performance spans the broad performance of the employee as it concerns organizations goals and objectives and therefore supersedes just task completion
What does the Finder do?
deletes files
empties the Trash
locates files
opens applications
organizes computer folders and files
turns off the computer
The Finder manages and organizes folders and documents for the PC.
What is the Finder?The Finder is the default report supervisor and graphical user interface shell used on all Macintosh working systems.
It was delivered with the primary Macintosh PC, and additionally exists as a part of GS/OS on the Apple IIGS. It was completely rewritten with the release of Mac OS X in 2001.
The Finder makes use of a view of the report gadget. This is rendered through the use of a computer metaphor; that is, the documents and folders are represented as suitable icons.
It makes use of a comparable interface to Apple's Safari browser, wherein the consumer can click on a folder to transport to it and circulate among places with the use of "again" and "forward" arrow buttons.
Like Safari, the Finder makes use of tabs to permit the consumer to view a couple of folders; those tabs may be pulled off the window to cause them to separate into home windows.
The traditional Mac OS Finder makes use of a spatial metaphor pretty distinct from the extra browser-like technique of the current macOS Finder.
In the traditional Finder, starting a brand new folder opens the vicinity in a brand new window: Finder home windows are 'locked' in order that they might most effectively show the contents of one folder.
So it's clear that organizing PC folders and documents is the proper option.
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what would be the profit or loss to an investor who bought an october expiration tesla call option with an exercise price of 1300 if rtesla
Answer: -$200 or $200 loss
Explanation:
Profits are made on call options when the price of the underlying asset increases in value.
These contracts are sold per 100.
The premium paid is subtracted from the profit to find the net profit.
Net Profit = ( 1,301 - 1,300 - 3) * 100
= -$200
Which of the following are known about the Business-IT relationship in organizations?
A. It tends to cluster into patterns
B. It is simple and trustful
C. Different expectations and accountabilities may lead tolack of trust.
D. It is a multifaceted interaction of people and processes
Answer:
Business-IT Relationships in Organizations:
C. Different expectations and accountabilities may lead to lack of trust.
Explanation:
But, this should not be allowed to prevail. There is the need to achieve a synergetic alignment between Business and IT in any organization. Aligning Information Technology to the business model and strategies is key in achieving milestones, goals, and the organization's missions. IT is a business-enabler. IT renders pivotal service to business and should be managed in so much that maximum value is derived from it, especially given the amount of capital that is being invested in IT in the present IT economy and landscape.
A commuter bus company uses two measures of activity, routes and commuters, in the cost formulas in its budgets and performance reports. The cost formula for bus operating costs is $56,880 per month plus $2,884 per route plus $14 per commuter. The company expected its activity in November to be 89 routes and 256 commuters, but the actual activity was 97 routes and 265 commuters. The actual cost for bus operating costs in November was $305,100. The spending variance for bus operating costs in November would be closest to:A. $35,238 FavorableB. $12,040 FavorableC. $23,198 FavorableD. $35,238 UnfavorableE. $12,040 Unfavorable
Answer:
B. $12,040 Favorable
Explanation:
We will need to calculate first the budgeted cost for bus operating costs in November, which is given by;
C = $56,880 + $2,884* F + $14* N
Where;
F = expected number of routes in the month
N = expected number of commuters in the month
From the passage, the company expected its activity in November to be 89 routes and 256 commuters; we were also informed that the budget for the bus operating costs have been prepared before the actual costs are known.
Therefore, the budgeted cost for bus operating costs in November would be ;
= $56,880 + $2,884 × 89 + $14 × 256
= $56,880 + $256,676 + $3,584
= $317,140
The spending variance for bus operating costs in November would be;
= The actual cost for bus operating costs in November - The Budgeted cost for bus operating costs in November
= $305,100 - $317,140
= $12,040 F
The distribution of stock rights to existing common stockholders will increase paid-in capital at the
Answer:
Date of issuance of rights - No
Date of exercise of the rights - Yes
Explanation:
The distribution of stock rights to existing common stockholders will increase paid-in capital at the date of exercise of the rights.
Actually, Paid in capital increases whenever funds are received. This means on the day the rights are exercised and not when the rights are issued.
You are a communication designer for a design company. Your team is working on a project designing an interior office space for an information technology company in New York City. The project is well underway, and your team has been working together for three months now. Formal leadership is no longer necessary because everyone is taking on leadership functions related to their roles. Your part of the project requires you to identify the communication needs of the client and to incorporate those needs into the design plans. In this case, the client needs wireless Internet access and a local intranet throughout the interior. You’ve already spoken to the supplier. Now you’ll need to talk to the teammate overseeing the building to make sure the contractor can handle the job. The two of you agree to meet with the contractor together. After meeting with the contractor, you report back to the rest of the team and smoothly adjust the project plan to accommodate the new information.
Norming
Answer choices:
Performing
Norming
Forming
Storming
This is incomplete because the question is missing, here is the missing question and options:
Which phase of team development does this situation describe?
A. Performing
B. Norming
C. Forming
D. Storming
The answer to this question is B. Norming
Explanation:
In team development, norming is the third stage in the process of creating a team and making its members work together. This stage occurs after members have known each other (forming) and had solved their problems (storming). Due to this, during this stage members are able to work together and there are clear roles, which facilitates communication and adaptation. This stage is the one described because roles have been defined "everyone is taking on leadership functions related to their roles" and it seems the integration after three months facilitates communication and changes "report back to the rest of the team and smoothly adjust the project plan."
Which of the following would help in the creation of a visual workplace?
a) Arrows painted on the floor indicating the flow of the process
b) A standard operating procedures manual on file
c) Emailing staff to reinforce file naming conventions
d) A manager advising customers on how to return purchases
Answer:
a) Arrows painted on the floor indicating the flow of the process
Explanation:
A visual workplace is created when there are use of visual symbols to communicate and direct employees on how things are to be done.
Visual workplace has the advantage of always being available to direct employees on how to get things done.
Even when employees are working at some distance apart they can easily get directions on what to do as long as they can see the visual symbols.
For example arrows painted on the floor indicating flow process is a visual symbol that helps employee know the process flow of the operation
Machine A costs $9,500 and has an annual operating cost of $5,500. Machine B costs $8,000 and has an annual operating cost of $5. What is the annual rate of return the additional investment in machine A?
Complete Question:
Machine A costs $9,500 and has an annual operating cost of $5,500. Machine B costs $8,000 and has an annual operating cost of $5,800. Each machine has an economic life of 8 years. What is the annual rate of return the additional investment in machine A?
Answer:
IRR is 11.81%
Explanation:
We have to find the annual rate of return on the additional investment in machine A. The additional investment can also be termed as incremental investment which is $1,500 ($9,500 - $8,000). Furthermore, the additional cost savings of operating machine A is $300 ($5,500 - $5,800). And this cost savings will be during the life span of the machine A.
Now
We can compute IRR, by using Excel as under:
A hospital revenue bond issue is being underwritten on a negotiated basis. The offering consists of $20,000,000 par value of term bonds. The underwriter has agreed to a spread of $30.00 for each $5,000 bond. The manager has set the additional takedown at $12.00 per bond and the selling concession at $15.00 per bond. If a selling group member sells a $5,000 par value bond, the syndicate member earns:
A. $0
B. $12.00
C. $15.00
D. $27.00
Answer: B. $12.00
Explanation:
Normally the syndicate member is to earn both the additional takedown amount as well as the selling concession should they find the customers.
If a selling group finds the customers however as was the case here, the syndicate member will only earn the additional takedown amount of $12 per bond.
An issue of common stock has just paid a dividend of $2.00. Its growth rate is equal to 4%. If the required rate of return is 7%, what is its current price
Answer:
$69.33
Explanation:
The current stock price in DDM = D1/r-g
Where D1= Dividend at year 1 = Current dividend (1+ growth rate)
D1= $2 (1+ 4%)= $2.08
R = Required rate of return= .07
Current Stock price= $2.08/0.07 - 0.04
Current Stock price= $2.08/ 0.03
Current Stock price= $69.33
If an investor who has owned FLB stock for two years buys 1 FLB Oct put, this will:________.a. end the holding period and cause any loss to be long term and any gain to be short term.b. end the holding period and cause any gain or loss to be long term. c. have no effect on the holding period.d. end the holding period and cause any gain or loss to be short term.
Answer: have no effect on the holding period.
Explanation:
If an investor who has owned FLB stock for two years buys 1 FLB Oct put, this will have no effect on the holding period.
This is because the stick was already held long term by the investor when the put was gotten, therefore there will be no impact on the holding period.
Fallingstar, Inc. has 103,000 shares of common stock issued and outstanding, with a par value of per share. It declared a % common stock dividend; market value is per share. Which of the following is the correct journal entry to record the transaction?
a. debit Common Stock Dividend Distributable 51,154, debit Paid In Capital in Excess of Par-Common $196,606, and credit Retained Earnings $197.760.
b. debit Stock Dividends $197.760 and credit Cash $197.760.
c. debit Stock Dividends $197.760 and credit Paid - In Capital in Excess of Par-Common $197,760.
d. debit Stock Dividends $197.760, credit Common Stock Dividend Distributable 51.154, and credit Paid - In Capital in Excess of Par-Common $196,606.
Answer: debit Stock Dividends $197,760, credit Common Stock Dividend Distributable 1,154, and credit Paid - In Capital in Excess of Par-Common $196,606.
Explanation:
Here is the correct question:
Fallingstar, Inc. has 103,000 shares of common stock issued and outstanding, with a par value of $0.07 per share. It declared a 16% common stock dividend; market value is $12 per share. Which of the following is the correct journal entry to record the transaction?
The correct answer is debit Stock Dividends $197,760, credit Common Stock Dividend Distributable 1,154, and credit Paid - In Capital in Excess of Par-Common $196,606.
Stock dividend is calculated as:
= 103,000 × 16% × $12
= $197,760
Common stock dividend distributable is calculated as:
= 103,000 × 16% × $0.07
= $1153.6
= 1154
3. Assuming the same sales mix, at what total sales level would Pure Water be indifferent between using the old equipment and buying the new production equipment
Answer:
The question is not complete. I want to assume the correct question is this:
Crystal Clear Products produces two types of water filters. One attaches to the faucet and cleans all water that passes through the faucet. The other is a pitcher cume filter that only purifies water meant for drinking. The unit that attaches to the faucet is sold for $90 and has variable costs of $25. The pitcher-cume-filter sells for $110 and has variable costs of $20. Crystal Clear sells two faucet models for every three pitchers sold. Fixed costs equal $1,200,000.
Assuming the same sales mix, at what total sales level would Crystal Clear be indifferent between using the old equipment and buying the new production equipment? If total sales are expected to be 24,000 units, should Crystal Clear buy the new production equipment?
Explanation:
Let b be the total sales volume at which the company's indifference is based
Let the average contribution in the old system be $80
The profit will be 80b - 1200000
Let the average contribution in the new syste, be $88
The profit will be 88b - 1408000
Now let us equate the two average contributions to get:
80b - 1200000 = 88b - 1408000
Let us find b,
88b - 80b -1408000 = -1200000
8b = -1200000 + 1408000
8b = 208000
b = 208000 / 8 = 26000 units
If total sales are expected to be 24,000 units, and the total sales volume at which the company's indifference is based 26,000 units, therefore Crystal Clear should not buy the new production equipment.