a. Given the following graphs, calculate the total fixed costs, variable costs per unit, and sales price
Question:
a. Given the following graphs, calculate the total fixed costs, variable costs per unit, and sales price for Firm A. Firm B’s fixed costs are $120,000, its variable costs per unit are $4, and its sales price is $8 per unit.
b. Which firm has the higher operating leverage at any given level of sales? Explain.
c. At what sales level, in units, do both firms earn the same operating profit?
Transcribed Image Text:
Firm B Firm A Revenues and Costs (Thousands of Dollars) Revenues and Costs (Thousands of Dollars) Total Costs Total Costs Total Revenues Total Revenues 280 280 240 240 Break-Even Point 200 200 Break-Even Point 160 160 Fixed Costs 120 120 Fixed Costs 80 80 40 40 10 20 25 30 40 50 60 10 20 30 40 50 60 Units (Thousands) Units (Thousands)
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 55% (9 reviews)
a Firm A 1 Fixed costs 80000 2 Variable costunit 3 Selling priceunit Firm B 1 Fixe...View the full answer
Answered By
PALASH JHANWAR
I am a Chartered Accountant with AIR 45 in CA - IPCC. I am a Merit Holder ( B.Com ). The following is my educational details.
PLEASE ACCESS MY RESUME FROM THE FOLLOWING LINK: https://drive.google.com/file/d/1hYR1uch-ff6MRC_cDB07K6VqY9kQ3SFL/view?usp=sharing
3.80+
3+ Reviews
10+ Question Solved
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324664553
Concise 6th Edition
Authors: Eugene F. Brigham, Joel F. Houston
Question Posted:
Students also viewed these Corporate Finance questions
-
At any specified level of revenue, a. The lower a businesss costs, the greater are its profits. b. The lower a businesss costs, the lower are its profits. c. The greater a businesss costs, the...
-
Operating leverage measures a company s fixed costs as a percentage of its total costs It is used to evaluate the break even point of a business as well as the likely profit levels on individual...
-
Given the following code: LW R2, 0(RO) Add R1, R2 Sw R1, 10(RO) Add R1, R4 Mov R3, R1 Sub R2, R1 Inc RO For a processor with Harvard architecture, running the above code How many cycles needed to run...
-
The methyl alcohol flowing in the inner pipe of a double pipe exchanger is cooled with water flowing in the jacket. The inner pipe is made from 1-inch (25mm) schedule 40 steel pipe. The thermal...
-
If you were facing an especially complex legal dispute-one involving many facets and several different types of law-would you consent to allowing a U.S. magistrate judge to decide the case? Why or...
-
The Gallup Organization classifies Americans as very religious if they say religion is an important part of their daily lives and that they attend religious services every week or al-most every week....
-
Simplify the irrational number \(\sqrt{2,548}\) and express in lowest terms. Identify the rational and irrational parts.
-
Outdoor Inn, a camping equipment manufacturer in southern Utah, is developing a production schedule for a popular type of tent, the Double Inn. Orders have been received for 180 of these to be...
-
You are plant accountant for Kelly corp. you have been asked to draft a brief issue memo documenting the accounting for the following issue. Kelly crop has leased a mine from which it recently...
-
1. How strong are the competitive forces confronting J. Crew in the market for specialty retail? Do a [Michael Porter] five-forces analysis to support your answer. (see chapter 3 in the textfor...
-
Tapley Inc. currently has assets of $5 million, has zero debt, is in the 40% federal-plus-state tax bracket, has a net income of $1 million, and pays out 40% of its earnings as dividends. Net income...
-
Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Blooms debt currently has an 8% yield to maturity. The risk-free rate (rRF) is 5%, and the market risk...
-
Millan & Co. makes electronic components. Michelle Millan, the president, recently instructed Vice President Pablo Tapia to develop a total quality control program: If we dont at least match the...
-
There is a European and an American put on the same non-dividend paying stock today. Both put options have the same strike price of 5,000 and the same expiration date of October 28, 2021. The...
-
Cunningham and Reilly Crane Hire plc has common stock with an ex dividend market price of 0.70 per share and a constant expected annual dividend growth rate of 5%. A dividend of 0.10 per share has...
-
Can fair trade still be a valuable tool for achieving economic equality, or do we need a new system? QUESTION 2:How can we address the power imbalances between producers and consumers? WEBSITE...
-
Does APPLE issues stocks in foreign countries? If yes, are there any correlations in the stock price movements?
-
A manager is in charge of a profit center department. He reports the following figures: COGS = $60,000. (Allocated) administrative expense = $16,000. (Allocated) indirect expense = $51,000. You are...
-
Regarding the recent advances in drilling technologies that permit natural gas to be recovered from shale deposits cost competitively, present arguments from an environmental perspective in favor and...
-
$10,000 was borrowed at 3.5% on July 17. The borrower repaid $5000 on August 12, and $2000 on September 18. What final payment is required on November 12 to fully repay the loan?
-
What is the EEO-1 report? Who does it apply to, and how often must the report be filed? How does the EEOC use the data collected?
-
You are considering an investment in Keller Corps stock, which is expected to pay a dividend of $2.00 a share at the end of the year (D1 = $2.00) and has a beta of 0.9. The risk-free rate is 5.6%,...
-
Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends,...
-
Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 7%...
-
In the scientific method, which of these steps would normally follow experimentation and sharing of results? 1. Hypothesis development 2. Hypothesis creation 3. Theory development 4. Peer review 5....
-
Russell claims that philosophies that assimilate the universe to humanity are the one's that best foster enlargement of the self. O True O False
-
Using the grant proposal narrative provided by Jennifer, assume the role of Steven to research expenses needed for the nonprofit organization program and estimate amounts based on the expected number...
Study smarter with the SolutionInn App