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Galehouse Gas Stations Inc. expects sales to increase from $1,580,000 to $1,780,000 next year. Galehouse believes that net assets (Assets - Liabilities) will represent 65
Galehouse Gas Stations Inc. expects sales to increase from $1,580,000 to $1,780,000 next year. Galehouse believes that net assets (Assets - Liabilities) will represent 65 percent of sales. His firm has an 8 percent return on sales and pays 30 percent of profits out as dividends. a. What effect will this growth have on funds? decrease by The cash balance will b. If the dividend payout is only 5 percent, what effect will this growth have on funds? The cash balance will increase by International Data Systems' information on revenue and costs is relevant only up to a sales volume of 114,000 units. After 114,000 units, the market becomes saturated and the price per unit falls from $14.00 to $8.80. Also, there are cost overruns at a production volume of over 114,000 units, and variable cost per unit goes up from $7.00 to $7.25. Fixed costs remain the same at $64,000. a. Compute operating income at 114,000 units. Operating income b. Compute operating income at 214,000 units. Operating income
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