Answer:
$ 19.5
Explanation: If you save $15 instead of spending it on coffee, you would be receiving simple interest of 3% pa for 10 years. At the end of the tenth year the total interest amount you would receive would be 30% of $ 15 ie; $ 4.5
3% pa for 10 years = 30% at the end of 10 years
30% of $ 15 = $ 4.5
The aggregate amount saved at the end year is
$15 + $4.5 = $19.5
on december 31, 2021, interlink communications issued 4% stated rate bonds with a face amount of $110 million. the bonds mature on december 31, 2051. interest is payable annually on each december 31, beginning in 2022
Interest - Bond Price is $97.45 million, rounded to the nearest million.
Interest :
In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate.It differs from a fee that the borrower may pay to the lender or a third party. It is also distinct from dividend which is paid by a company to its shareholders (owners) from its profit or reserve, but not at a particular rate decided beforehand, rather on a pro rata basis as a share in the reward gained by risk taking entrepreneurs when the revenue earned exceeds the total costs.
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Complete Question
On December 31, 2021, Interlink Communications issued 5% stated rate bonds with a face amount of $113 million. The bonds mature on December 31, 2051. Interest is payable annually on each December 31, beginning in 2022. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $). Determine the price of the bonds on December 31, 2021, assuming that the market rate of interest for similar bonds was 6%.
Table values are based on:
n = 30
i = 6%
Cash Flow Amount Present Value
Interest $111,300,000 $74,454,240
Principal $100,000,000 $13,137,000
Price of bonds $87,591,240
What best describes the main purpose of a budget
Explanation:
A budget helps create financial stability. By tracking expenses and following a plan, a budget makes it easier to pay bills on time, build an emergency fund, and save for major expenses such as a car or home. Overall, a budget puts a person on stronger financial footing for both the day-to-day and the long term.
the objectives of the scene designer do not include multiple choice helping to set the mood and style of the production. developing a design concept. solving practical design problems. assisting in the blocking of the production.
The objectives of the scene designer do not include assisting in the blocking of the production.
Who is Scene Designer ?
The development of theatrical, as well as film or television, scenery is known as scenic design (sometimes referred to as scenography, stage design, or set design). However, in recent years, trained professionals with B.F.A. or M.F.A. degrees in theatrical arts have made up the majority of scenic designers, who come from a variety of artistic backgrounds. Set and scenery designers attempt to complement the production's overall creative goals when creating sets and scenery. Although some people have argued that scenic design is also production design, it is typically seen as a component of a film or television's visual production.
Working with the theatre director and other members of the creative team, the scenic designer is in charge of developing the production's setting. To communicate with other members of the production team, scenic designers are responsible for producing scale models of the scenery, renderings, paint elevations, and scale construction plans. One of the most crucial responsibilities of a scenic designer is explaining the specifics of the scenic environment to the technical director, production manager, charge scenic artist, and prop master.
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jane, from colorado, is an active skier and describes herself as someone who seeks self-expression. she loves racing down a mountain, and on vacations she often seeks out challenges and thrills of all types. marketers would use this information when incorporating
Marketers will use this information of Jane while incorporating lifestyle segmentation.
Lifestyle Segmentation- A marketing technique called lifestyle segmentation entails dividing client information into smaller groups. These components represent the shopper's preferences, hobbies, dislikes, and regular behaviors. These segments are used by marketers to develop customer personas and tailored advertising campaigns that more adequately describe the wants and demands of their target market.
This tactic is a crucial component of targeted advertising, which is gaining popularity with businesses from all sectors. Age, activity, income, opinions, relationship status, work status, and attitudes are a few of the variables that marketers take into account while lifestyle segmentation.
Here, the hobbies, activities and attitude of Jane will be considered for segmenting the market on the basis of lifestyle.
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havermill company establishes a $340 petty cash fund on september 1. on september 30, the fund is replenished. the accumulated receipts on that date represent $82 for repairs expense, $155 for merchandise inventory, and $31 for miscellaneous expenses. the fund has a balance of $72. on october 1, the accountant determines that the fund should be increased by $68. the journal entry to record the reimbursement of the fund on september 30 includes a: multiple choice credit to cash for $72. credit to merchandise inventory for $155. debit to repairs expense for $82. credit to cash for $340. debit petty cash for $268.
The Journal entry for reimbursement of the Petty cash fund on September 30 will be (c) Credit to cash 340.
The basic journal entry for establishing petty cash fund is-
Petty cash account Dr. $340
To Cash account $340
A petty cash fund is a tiny amount of company cash that is commonly kept readily available (for example, in a locked drawer or box) to pay for minimal or incidental expenses such as office equipment or employee compensation. It is mainly available for day-to-day small expenses that are very regular in nature.
A petty cash fund will be resolved on a routine basis, and payments will be documented on the income statement. So, every department in a big organization could have its own petty cash fund to manage small expenses. Certain internal systems can be circumvented by employing a petty cash fund. However, the existence of petty cash doesn't really imply that it can be employed for whichever reason by anyone. To handle the money, many businesses use stringent internal control systems.
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Legal document specifying what a patient would like to have done for health care if he or she becomes incapacitated and cannot make decisions; also known as a living will?.
A legal document specifying what a patient would like to have done for health care if he or she becomes incapacitated and cannot make decisions; also known as a living will is a True Statement.
A legal document that outlines a contractual arrangement or gives rights. The instrument, legal instrument, and official document are some synonyms. Mutual commitments between two or more people include contracts and agreements.
A living will is a legally binding agreement that outlines your preferences for additional medical decisions, such as pain management or organ donation, as well as the medical procedures you would not want to be used to maintain your life.
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one of the advantages of a wide span of control is: group of answer choices a lack of synchronization greater organizational flexibility a high degree of control close supervision of employees an absence of managerial support
One of the advantages of a wide span of control is it allows for quick coordination and decision-making. Increased motivation Less critical decision-making is delegated to employees by managers.
Because wide span are more involved in making decisions about their work, employees may experience higher levels of job satisfaction and motivation. A broad range of control costs less because the company has fewer management. Most employees are on the same level and can collaborate with one another with clear delegation of tasks when there is only one management, or when there is a manager with a supervisor or team leader in the hierarchy below.
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. because some people's incomes rise faster than inflation while others people's incomes rise more slowly: a) there are no adverse effects from inflation. b) there are redistribution effects from inflation. c) arms were created. d) people shorten their time horizons.
Because some people's incomes rise faster than inflation while others people's income rise more slowly There are no adverse effects from inflation.
The term "income" refers to the cash that is given to a person or organization in return for their services or goods. According on the situation—for instance, taxation, financial accounting, or economic analysis—income may have a variety of definitions. Most people define their income as their overall earnings, which includes their wages and salaries, investment returns, pension payments, and other receipts. Income for businesses refers to the sum of the money collected from the sale of goods and services as well as any interest or dividends on the company's cash holdings and reserves.
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suppose that an anti-smoking campaign in moscow, russia, is successful so that muscovites smoke less and chew gum more. tobacco companies lay off workers, while chewing gum manufacturers employ more workers. this is an example of a. structural unemployment created by efficiency wages. b. frictional unemployment created by efficiency wages. c. structural unemployment created by sectoral shifts. d. frictional unemployment created by sectoral shifts.
This is an example of a frictional unemployment created by sectoral shifts as tobacco companies lay off workers, while chewing gum manufacturers employ more workers.
Sectoral shifts occur as a result of technological changes and changes in the demand for goods, which cause changes in how much labor different industries require. The time spent switching jobs causes frictional unemployment. Frictional unemployment is caused by voluntary job shifts within an economy. Despite a growing, stable economy, frictional unemployment occurs. Workers who decide to quit their jobs in search of new ones, as well as those who enter the labor force for the first time, constitute frictional unemployment.
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tom started a business selling footballs. before filing articles of incorporation, he arranged for a bank loan and hired three people to run his store. tom is known in corporate law as a/an multiple choice preincorporater. private holder. installer. promoter.
Tom is referred to as a promoter in corporate law.
A promoter is the founding member or organizer of a corporation or business venture in corporate law; the individual who takes the initiative to start or organize a business. The phrase is most commonly heard in the context of incorporation. A promoter would carry out the actions required to incorporate the business venture. A promoter in business law is either a contractual organizer or a shareholder within the organization. The term "promoter" is not defined in the law.
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A recent change in indian law allows some foreign retailers to operate in india without partnering with an indian company. This represents a lowering of ________ to international trade.
If Indian law allows some foreign retailers to operate in India without partnering with an Indian company, then this represents a lowering of economic barriers to international trade.
In the field of business, a barrier can be described as a factor that prevents others to execute their business in a certain place according to the business policies made by a place or country.
Many countries do not allow foreign retailers to conduct their business in the country without a local partner. This is done so that the competition for local businesses stays limited.
However, to empower international trade, a country might need to lower its economic barriers and allow other countries to conduct business in it without a local partner.
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which product exists in a monopolistically competitive market?
Numerous businesses provide competitive products or services that are similar but not exact substitutes. A monopolistic competitive market is present.
Clothing and hair salons are two examples of sectors with monopolistic competition. When businesses provide rival goods or services that are comparable but imperfect substitutes, monopolistic competition exists.
A monopolistic competitive industry has low entry requirements, and decisions made by any one firm do not directly affect those of its rivals. The pricing and marketing choices made by the rival companies serve as their points of differentiation.
Between a monopoly and perfect competition, monopolistic competition exists, combines aspects of both, and includes businesses with comparable but distinct product offerings.
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Answer:
clothing
Explanation:
I learn today that monopolistically competitive is something with varity like cloths there are plenty of options
1. shane wanted to have a recording studio custom-built in his home. he sought estimates from several contractors. rory submitted the lowest estimate. shane called rory to ascertain the quality of the materials in the estimate and to find out if he could substitute a superior brand of acoustic tiles for the same price. rory said that he would have to check into the price difference. the parties also discussed a possible start date for construction. two weeks later, shane changed his mind and decided not to go forward with his plan of building a recording studio. rory filed suit against shane for breach of contract. a. did rory's estimate meet the requirements for an offer? why or why not? b. was there an acceptance of the offer by shane? why or why not? 2. bart owned 100 shares of a stock that was actively traded on a national stock exchange. bart offered the 100 shares to any of a group of six people in a conversation at a party. the offered price was $72.50 per share, the price at which the shares had closed that day. no one really responded to the offer at that time. ten days later when the shares were trading at $76.25, marie, one of the offerees at the party, appeared at bart's office saying that she accepted the offer. bart claimed the offer no longer was available. a. did bart make a valid offer? why or why not? b. explain whether you think marie has a valid claim for breach of contract against bart.
Law on Contracts refers to an agreement between two parties that have mutual obligations and who provide the agreed-upon consideration under the law, with the stipulation that the other party accept the consideration.
Which agreement between two parties is a contract?
Commercial agreement: Written business agreements serve as a record of the negotiations between parties addressing the commercial elements of goods or services. The agreements outline each party's responsibilities and the advantages they will receive as a result of the agreement.
What does a contract's "mutual obligation" mean?
The term "mutuality of obligation" refers to both the initial commitment to provide the task (and pay for it) and the ensuing commitment to complete it (and get paid for it). It's one of the primary criteria by which tax inquiries and employment tribunals can decide whether a contractor is an employee or not (and whether they owe any tax).
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in 2021, madden, who is single, has adjusted gross income of $145,200, uses the standard deduction of $12,550, and has $132,650 of taxable income. compute the following for madden.
Answer:
a)Federal Income Tax Liability = $25,857
b)Statutory Tax Rate = 10%, 12%, 22%, and 24%
c)Marginal Tax Rate = 24%
d)Average Tax Rate = 19.5%
e)Effective Tax Rate = 17.8%
Explanation:
a.)Federal Income Tax Liability = $14,751 + 24% x ($132,650 - $86,375)
Federal Income Tax Liability = $14,751 + $11,106
Federal Income Tax Liability = $25,857
b.)Statutory Tax Rate = 10%, 12%, 22%, and 24%
c.)Marginal Tax Rate = 24%
d)Average Tax Rate = Total Tax Liability / Total Taxable Income
Average Tax Rate = $25,857 / $132,650
Average Tax Rate = 19.5%
e)Effective Tax Rate = Total Tax Liability / Adjusted Gross Income
Effective Tax Rate = $25,857 / $145,200
Effective Tax Rate = 17.8%
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Tastes change so that demand for a product increases. At the same time, taxes on the product paid by the producer are lowered. Given that output increased, which change had the largest effect?.
A basic tenet of economics is that when there is a surplus of an item or service above what is needed, prices will decline. Prices usually rise when supply is insufficient to meet demand. When demand is constant, the connection between supply and prices of products and services is inverse.
A decline in demand will result in a drop in supply and a decline in the equilibrium price. The equilibrium products will decrease with an increase in supply, leaving all other factors unchanged, but the amount demanded will rise. When supply is constant but demand rises, there is a shortage, which raises the equilibrium price. Demand falls while supply stays the same, creating a surplus and a lower equilibrium price. A surplus results in a lower equilibrium price if supply grows while demand stays the same.
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What's the BEST way to make sure that marketing copy uses conversational language? Question 19 options: Use quotations around every statement. Run it through a spell-checker. Read it out loud. Use sophisticated, pompous-sounding language.
The best way that would be used to show that the marketing copy makes use of conversational language would be to Use quotations around every statement.
What is a conversational language?This is the term that is used to refer to the language or the words that are made use of in everyday communication. It is the type of communication that has to do with the language that people would use with their peers as well as when they go through certain activities like when they are shopping.
The use of the conversational language would be done here by running it around a spell checker.
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mac power bought intel stock for $32 a year ago and has received $1.09 in dividends. intel's current price is $36 a share. what is mac's rate of return if he sells intel at the current price?
The rate of return that the intel would have to sell if it is at the current price would be given as 15.91%.
How to solve for the rate of returnWe have the following details to solve the problem with
The mac power bought intel stock for $32
The amount of dividend that has been received is given as $1.09
The current price of the intel is given to be $36 a share.
Next we have to solve for the rate of return of Mac
The formula for the rate of the return is given as Total receipts/Total investments – 1
Where the total receipts is $36 + $1.09
The investment is $32
Then when we fill in the values we would have
37.09 / 32 - 1
= 1.1590625 – 1
= 0.1590625
This can be written in percentage as 15.91%
Therefore the rate of return of the mac product is given to be 15.91%
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with the five forces model, companies should watch the forces in the market. if the forces are strong competition generally increases and if the forces are weak competition typically decreases. group of answer choices true false
It's true that businesses should keep an eye on market forces when using the Five Forces Model. Competition normally grows when the forces are strong and diminishes when the forces are moderate.
What Are the Five Forces of Porter?
An industry's vulnerabilities and strengths can be ascertained using Porter's Five Forces, a model that identifies and examines five competitive forces that affect every industry. The structure of an industry is typically identified using the Five Forces analysis to develop company strategy.
Any sector of the economy can benefit from using Porter's model to better analyze industry rivalry and increase long-term profitability. After Michael E. Porter, a professor at Harvard Business School, the Five Forces concept was created.
Porter's five forces are:
There is conflict in the sector.Potential for new competitors to enter the marketInfluence of suppliersInfluence of consumersReplacement product riskThe limitations of the Five Forces model are exacerbated by the effects of globalization, notably the fact that it is backward-looking and its findings are largely only relevant in the short term. Another significant flaw in the framework is the propensity for using it to evaluate a single company rather than a whole industry, which is what it was designed for.
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If alejandro wants to pay off his student loan by basing it on how much he is earning at his job after graduation, what type of repayment plan is best for him?.
If alejandro wants to pay off his student loan by basing it on how much he is earning at his job after graduation, The type of repayment plan that is best for him is; Income-Driven Repayment Plan..
What is Income-Driven Repayment Plan?Income-Driven Repayment Plan can be defined as the plan that enables you to pay off your student loan by paying some certain amount of money to you every month and this money you are been paid will be determine by your income.
Based on the scenario it is advisable that he enroll under Income-Driven Repayment Plan as this will help him to pay off his student loan.
Therefore we can conclude that Income-Driven Repayment Plan is the right plan for him.
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is when a new legal entity is formed by a combination or consolidation of two firms. group of answer choices a merger a related diversification an acquisition an unrelated diversification
A merger is when a new legal entity is formed by a combination or consolidation of two firms.
Business transactions known as mergers occur when the ownership of one company or business organization is transferred to, or combined with, another firm or business organization.
Through a merger, two distinct companies become one new legal entity. Since it's uncommon for two comparable businesses to benefit equally by pooling their resources and personnel, including their CEOs, true mergers are uncommon. A merger of equals, as the name implies, often comprises businesses of the same size. When two businesses merge, the stock of each is ceded, and fresh equity shares are issued for the new company.
Companies or assets are consolidated through mergers which are done to spur growth, obtain competitive advantages, expand market share, or change supply chains.
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the prisoner's dilemma is an example of market signaling. a zero-sum game. a non-zero sum, non-cooperative game with a dominant strategy. adverse selection.
The prisoners dilemma is an example of a non cooperative game.
Prisoners Dilemma
The prisoner's dilemma is a common example of a game studied in game theory that demonstrates why two totally rational actors may refuse to cooperate even though it appears to be in their best interests to do so. Merrill Flood and Melvin Dresher framed it in 1950 while working at RAND. Albert W. Tucker formalised the game with prison sentence prizes and dubbed it "prisoner's dilemma," a version of which William Poundstone said in his 1993 book Prisoner's Dilemma as follows: "Two members of a criminal gang are arrested and imprisoned." Each prisoner is in solitary confinement and has no way of communicating with or sending messages to the other.
So, a zero-sum game, a non-zero sum, non-cooperative game is tough to achieve.
Therefore, the correct option is C.
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true or false: the division of value between the buyer’s share of value captured and the firm’s share of value captured is determined by the cost paid by the firm.
The statement "the division of value between the buyer’s share of value captured and the firm’s share of value captured is determined by the cost paid by the firm" is False
This is further explained below.
What is the division of value?Generally, the business and the buyer haggle over how to divide the value between their respective shares, the buyer's share of value, and the firm's part of the value.
In other words, the distribution of value is determined by the negotiation that takes place between the buyer and the enterprise.
The negotiation that takes place between the company and the customers, as well as the profit that the company makes when selling its product, is partially determined by the price that the customers pay for the product that the company sells.
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green oval electronics employs approximately 2,700 employees. during a recent workforce survey, it was found that 97 percent of the company's managers are white, although only 62 percent of the company's entire workforce is white. the company decided to implement a voluntary affirmative action plan that would reserve 25 percent of the openings in a managerial development program for blacks and other minorities, only until the percentage of minority employees working as supervisors was representative of the percentage of available minorities in the local labor force.
This affirmative action plan is legal because it is temporary and does not unnecessarily infringe on the rights of white employees.
For federal contractors and subcontractors, affirmative motion ought to be taken by using included employers to recruit and strengthen qualified minorities, girls, individuals with disabilities, and included veterans. Affirmative actions include schooling packages, outreach efforts, and different advantageous steps.
Affirmative movement goals to proper historical wrongs by means of favoring described agencies of individuals that were discriminated in opposition to within the past.
As instance, a company may publish jobs in regions with high numbers of minority activity seekers to reach those under-represented applicants.
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carrie, a white employee, alleged that she was forced to leave her job for refusing to follow her employer's discriminatory practices against asian employees.
Carrie, a white employee, alleged that she was forced to leave her job for refusing to follow her employer's discriminatory practices against Asian employees. Carrie had a valid claim on title VI of the Civil Rights Act of 1964.
The Civil Rights Act of 1964 is a landmark civil and labor law that prohibits discrimination based on race, color, religion, sex and national origin.
The Civil Rights Act of 1964 prohibits discrimination based on race, color, religion, sex, or national origin. This Civil Rights Act provision prohibits discrimination based on gender and race in hiring, promotion, and termination.
The result was the Civil Rights Act of 1957, the first civil rights act since Reconstruction. The new law created the Department of Justice's Civil Rights Division and empowered federal prosecutors to seek injunctions against interference with voting rights.
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question mode multiple choice question livelife company had a credit balance of $10,000 in accounts payable at the beginning of the period, and a credit balance of $6,000 at the end of the period. based on this information, the adjustment to net income for the period will be reported as
At the beginning of the period, accounts receivable had a debit amount of $10,000, and at the end of the period, it had a debit balance of $6,000.
A drop of $4,000 will be added to net income as a result of the adjustment to net income for the period, which is based on this information.
What happens when the amount of accounts receivable increases over time?
An increase in an organization's accounts receivable balance indicates that more income has been generated with credit payments; consequently, more cash payments will need to be collected in the future. The amounts billed to the consumers who made credit payments, on the other hand, were received in cash if a company's A/R balance decreased.
What causes a decline in accounts receivable?
The ratio decreases when the balance of accounts receivable grows more quickly than sales grow. A decreasing ratio is mostly brought about by changes to the company's credit policy and growing issues with timely receivables collection.
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companies are required to highlight certain items in the financial statements so that users can better determine the long-run earning power of the company.
Answer:
These highlighted things could be non current assets that depreciated, huge loans and capital and drawings. Please justify your question more as I don't see a question.
developing countries should part 2 a. focus on producing service goods. b. not focus on economic growth. c. focus on production based on comparative advantage. d. produce goods that are capital intensive and not labor intensive.
Developing countries should focus on production based on comparative advantage.
Comparative advantage is an ability possessed by individuals, companies, or countries to produce goods and services using a lower amount of funds than the funds issued by competitors. Comparative advantage can provide the ability to sell goods or services at a lower price than competitors. Not only that, but comparative advantage can also help business owners realize a fairly strong sales margin.
The use of large amounts of funds by competitors who have a comparative advantage may not necessarily be able to obtain good results than with other companies that produce goods or services. This proves that a sacrifice in the form of spending funds or capital that is large enough may not necessarily produce a profit.
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A factory owner wants his workers to produce as many widgets as they can so he pays his workers based on how many widgets they produce. however, in order to make sure that the workers do not rush and produce a large number of poorly made widgets, he checks the widgets at random at various stages of their manufacture. If a defect is found in a widget, the pay of the entire section of the factory responsible for that defect is docked. How is this factory owner seeking to solve the agency conflict problem in this case?.
The factory owner seeking to solve the agency conflict problem in this case by supplying incentives so the agents act in the way principal desires.
Any relationship where one person is expected to behave in the best interests of the other has an inherent conflict of interest known as an agency problem. A conflict of interest between a company's management and its stockholders is referred to as an agency problem in corporate finance.
Enron is a particularly well-known illustration of the agency issue. The directors of Enron were required by law to safeguard and advance the interests of investors, but they lacked many other incentives to do so.
Any organisation, group, place of worship, or organisation run by the government could have this issue. Stockholders vs. management and stockholders vs. bondholders are two of the three types of agency issues.
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The complete question is ''A factory owner wants his workers to produce as many widgets as they can, so he pays his workers based on how many widgets they produce. However, in order to make sure that the workers do not rush and produce a large number of poorly made widgets, he checks the widgets at random at various stages of their manufacture. If a defect is found in a widget, the pay of the entire section of the factory responsible for that defect is docked. How is this factory owner seeking to solve the principal - agent problem in this case?
A. By making the agents into principals themselves
B. By ensuring that all workers co - operate to maximize the gains of their section
C. By maximizing the information that the principal obtains about the behavior of the agents
D. By supplying incentives so the agents act in the way principal desires
gray company estimates its doubtful accounts by aging its accounts receivable and applying percentages to various aged categories of accounts. the gray company computes a total of $3,600 in estimated doubtful accounts as of december 31. its accounts receivable account has a balance of $112,800 and its allowance for doubtful accounts has a credit balance of $600 before adjustment at december 31.
To get the allowance to the desired balance of $3,600, The Great Landscapes Company will need to increase the allowance account by $3,000, resulting in a bad debt expenditure of the same amount.
What is meant by an allowance for doubtful accounts?Because it lowers the value of an asset—in this example, the accounts receivable—the allowance for dubious accounts is referred to as a "contra asset." The projection made by the management of the number of accounts receivable that customers won't pay is known as the allowance also referred to as a bad debt reserve.
If actual results differ from expectations, management adjusts its estimating methodology to better align the reserve with actual results. When the provision for doubtful accounts is recorded concurrently with the sale under accrual-basis accounting, the accuracy of financial reports is improved.
By accurately matching the anticipated bad debt charge to the related sale, a more accurate picture of revenue and expenses for a specific time period is produced.
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engberg company installs lawn sod in home yards. the company’s most recent monthly contribution format income statement follows: amount percent of sales sales $ 145,000 100% variable expenses 58,000 40 contribution margin 87,000 60% fixed expenses 21,000 net operating income $ 66,000 required: 1. what is the company’s degree of operating leverage? 2. using the degree of operating leverage, estimate the impact on net operating income of a 24% increase in unit sales. 3. construct a new contribution format income statement for the company assuming a 24% increase in unit sales.
1. Company's degree of operating leverages = 1.31
2. When Company's sales increase by 24% then contribution also increases by 24%, the operating leverages = 1.24
3. Contribution format income statement assuming a 24% increase $71,920
What Is Operating Leverage?Operating leverage may be a cost-accounting formula that measures the degree to which a firm or project could increase operating income by increasing revenue. A business that generates sales with a high margin of profit and low variable costs has high operating leverage
Equating the numerical :1. Degree of operating leverage = [tex]\frac{Contribution }{Net operating income}[/tex]
Contribution = 87,000
Net Operating Income = $66,000
Thus, operating Leverage = [tex]\frac{87,000}{66,000}[/tex] = 1.31
2. If Company's sales increase by 24% then contribution also increases by 24%, :
Revised Contribution = $87,000 + 24 % = $107,880
Revised net Operating income = $107,880 - $21,000 (Fixed Cost) = $86,880
Degree of operating leverage = [tex]\frac{107,880}{86,880}[/tex] = 1.24
3. Contribution format income statement:
Sales = $145,000 + 24% = $179,800
Less: Variable Cost 58,000 + 24 % = $ 71,920.
Contribution = $107,880
Less: Fixed Cost = $21,000
Net Operating Income = Contribution - fixed cost
= $86,880
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