Monthly fixed cost: 10 000,-

Variable cost: 15,-/customer

Volume: 1 500 customers per month

Price: 25,-/customer

When business started, there came only 800 customers/month.

However, fixed cost was only 5000,-.

a)Break-even?

b)Profit?

c)How much should the price be to reach the original target in this situation with 800 customers?

Chapter 6 Homework

Problem 6A-8 High-Low Method; Predicting Cost [LO6-10]

Nova Company’s total overhead cost at various levels of activity are presented below:

Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 36,000 machine-hour level of activity is:

Nova Company’s management wants to break down the maintenance cost into its variable and fixed cost elements.

Required:

1. Estimate how much of the $215,460 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $215,460 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.)

2. Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bX.

3. Express the company’s total overhead cost in the form Y = a + bX.

4. What total overhead cost would you expect to be incurred at an activity level of 41,000 machine-hours?

Retail Corp adopted the dollar-value LIFO method on 1-1-2016

Given the above information, please answer the following questions:

1. 2A. What is the base inventory value ($)?

2. 2B. What is the dollar-value LIFO inventory at 12-31-16?

3. 2C. What is the dollar-value LIFO inventory at 12-31-17?

Retail Corp adopted the dollar-value LIFO method on 1-1-2016.

Given the above information, please answer the following questions:

1. 1A. What is the base inventory value ($)?

2. 1B. What is the dollar-value LIFO inventory at 12-31-16?

3. 1C. What is the dollar-value LIFO inventory at 12-31-2017?

alpha lumber co. has the following short-run total costs:
total explicit cost=$40,000
total implicit cost=$20,000
how profitable (economic profit, normal profit or economic loss) is the company in each of the following cases:
A. Total revenue=$65,000
B. Total revenue=$60,000
C. Total revenue=$55,000

Exercise 17-25 Postretirement benefits; determine APBO, service cost, interest cost; prepare journal entry [LO17-10, 17-11]

The following data are available pertaining to Household Appliance Company's retiree health care plan for 2018:

Required:
1. What is the accumulated postretirement benefit obligation at the beginning of 2018?
2. What is interest cost to be included in 2018 postretirement benefit expense?
3. What is service cost to be included in 2018 postretirement benefit expense?
4. Prepare the journal entry to record the postretirement benefit expense for 2018.

Key terms: Strategic Alliances, Build-Borrow-or-buy Framework, Cost Leadership, Focus Cost Leadership, Blue-Ocean Strategy

Your business is a tech company that sells new tech to 3 markets: U.S., Europe and Asia. Using the 5 key terms above explain in detail how you would apply these concepts in your business strategy? And how can you use these concepts in developing a strategy in your future workplaces?

Despite some theoretical assertions, many investors do care a great deal about dividends. They believe that sure dividends today (a bird in the hand) are less risky than a return in the form of capital gains in the future.

The following table lists some factors that might affect an investor’s preference for dividends. Indicate whether the given factors are likely to make an investor prefer to receive more or fewer dividends.

In examining investors’ preferences for dividends, it is useful to begin with the concept of dividend irrelevance. Dividend irrelevance suggests that in a world with no taxes or brokerage (or transaction) costs, firms and investors are indifferent to the paying or receiving of dividends.

However, as these restrictions are relaxed, various factors suggest that firms should pursue high or low payouts. One such factor is:

Dividends received far into the future are significantly more uncertain than dividends received in the near future.

Based on the factor described, identify whether investors, in general, will tend to favor high or low payout ratios.

Favor a high payout

Favor a low payout

Erin and Mia are finance researchers and are discussing the Modigliani and Miller (MM) dividend irrelevance theory. Based on your understanding of MM’s argument and the impact of the assumptions applied to the argument, fill in the missing parts of their conversation.

ERIN: Modigliani and Miller (MM) dividend irrelevance theory is based on several assumptions. However, in the real world, these assumptions don’t apply.

MIA: True. If the transaction cost assumption is removed, then investors do care about how they receive their gains from their investment—capital gains or dividends.

ERIN: You are right, Mia. According to MM’s theory, investors who own low- or nondividend-paying stocks could   their holdings to satisfy current income requirements.

MIA: But in the real world, Erin, this is not a fair assumption. Transaction costs with each trade activity will   the investor’s earnings leading investors toward preferring regular dividends.