Answer:
The seller owe the buyer amounts to $384.25 at the closing
Explanation:
The amount to which the seller owe to the buyer at the closing is computed as:
= Number of days × Amount of taxes per day
= 165 × $2.3288
= $384.25
Working Note:
Number of days = January 1 - June 15
= 165 days
Amount of taxes per day = Annual taxes / Number of days in the year
= $850 / 365
= $2.3288 per day
(Jan. 1 - June 14 = 165 days. $850 / 365 = $2.3288 per day tax liability.165 days x $2.3288 = $384.25)
An investment adviser representative (IAR) is engaged in options trading. The IAR decides that a fair charge for his services would be 7% per month of the assets under management. In order to do so, the IAR will disclose all fees and charges in both the advisory contract, signed by clients, and Form ADV. The IAR thinks that by the dual disclosure, he is acting appropriately. Is the IAR acting appropriately
Answer:
No, because the commission is excessive.
Explanation:
Financial advisers typically charge 0.5% to 1% of total portfolio per year. In this case this financial adviser would be charging 84% per year, and that is extremely excessive.
Commissions that exceed 1% per year are considered high, although if they are slightly above that range they are still considered legal.
Final answer:
The IAR's decision to charge a 7% monthly fee, even with full disclosure, is not in line with industry standards of around 1% annually and may not be appropriate. This fee is substantially higher than average mutual fund and retirement account management fees. Additionally, there is no evidence that such high fees correlate with superior performance in investments.
Explanation:
Whether the Investment Adviser Representative (IAR) is acting appropriately in charging a 7% monthly fee for options trading services, despite disclosing all fees and charges in the advisory contract and Form ADV, is questionable. The industry norm, as described in LibreTexts and observed in mutual funds like those from Vanguard, typically involves management fees that are quite lower than the proposed 7%. Typically, investment advisors charge fees around 1% of the asset value, while mutual fund fees tend to be one-tenth of 1%. Additionally, many retirement funds charge a nominal administrative fee each year, such as 0.25%, to manage assets. The proposed fee is not only significantly higher than the average mutual fund fee, but it may also not be viewed favourably by clients or regulatory bodies considering the fees' impact on investment performance. Historical data indicates that, on average, financial advisors do not consistently beat the market, raising questions on the justification for such high fees. Furthermore, the underperformance of investments like hedge funds, coupled with their high fees, has earned criticism for transferring wealth from investors to fund managers.
Quantities $r$ and $s$ vary inversely. When $r$ is $1200,$ $s$ is $0.35.$ What is the value of $s$ when $r$ is $2400$?
Answer:
0.175
Explanation:
Data provided in the question:
r and s vary inversely
Mathematically, we can represent the relation as
rs ∝ 1
or
rs = k ............(i)
here,
k is the proportionality constant
when,
r = 1200 ; s = 0.35
thus,
1200 × 0.35 = k
or
k = 420 ...............(ii)
similarly for case when r = 2400
rs = k [ From (i) ]
2400s = 420 [ value of k from (ii) ]
or
s = 0.175
Suppose that in the coming year, you expect Exxon-Mobil stick to have a volatility of 42% and a beta of 0.9, and Merck's stock to have a volatility of 24% and a beta of 1.1. The risk free interest rate is 4% and the market's expected return is 12%.
Answer:
Which stock has the highest total risk?
Exon Mobil has a higher risk
Explanation:
Exon Mobil has a higher risk because it has a volatility of 42% which is higher than the 24% volatility of Merck's stock. The stock with a higher volatility is more riskier as it's returns are less stable and deviate from the mean more. Although Exxon has a lower Beta then Merck we cant call it less riskier because Beta only explains how the price of the stock move in relation to the market but does not explain all the risks of the stock, where as volatility takes into account all the risks of a stock.
Galen and Leslie are directors, but not officers, of Tropical Travels, Inc. Tropical Travels becomes embroiled in a controversy over airline kickbacks. As directors, Galen and Leslie can be named in any lawsuit that may result from the company's actions. Because of their right of.
Answer: indemnity
Explanation: Indemnity is a legal obligation by one side (indemnifier) to make up for the loss to the other side (indemnity holder) as a consequence of the actions of the indemnifier or another person.
Generally, but not always, the requirement to indemnify is synonymous with the contractual obligation to "keep harmless" or "protect harmless."
Indemnities lay the foundation of several insurance policies; for example, various types of insurance might be obtained by a vehicle owner as compensation for various types of injury resulting from car services, such as damage to the vehicle itself, or medical costs due to an accident.
Which type of consumer problem solving is typically used when a consumer already has a large amount of experience in how to meet a specific need and does not require additional information?
A. routinized response behaviorB. unthinking problem solvingC. limited problem solvingD. rational problem solvingE. extensive problem solving
Answer:
Routinized response behavior
Explanation:
The problem solving method used by a consumer who have a large experience on a particular kind of purchase and doesn't require additional information is the routinized problem solving method.
The routinized problem solving method involves consumers buying products that they are already familiar with when making a purchase decision.
Jonas enters into an oral contract with Chelsea to lease $ 100,000. Chelsea pays his house to her for him $100,000 and moves in. A month later, Jonas learns that his state requires contracts for the lease of goods with payments of $1,000 or more to be in writing. Which of the following options does either party have?
1. Jonas can evict Chelsea as the contract does not comply with the Statute of Frauds and is hence void.
2. The contract cannot be rescinded by either party as it has already been executed.
3. Chelsea can rescind the contract on the grounds of noncompliance with the Statute of Frauds
4. Jonas can rescind the contract on the grounds of noncompliance with the Statute of Frauds.
Answer: The contract cannot be rescinded by either party as it has already been executed.
Explanation: A contract is a binding agreement that is enforced by the law in some ways.
Their prior ignorance before the contract was made cannot affect future discoveries.
Anyone of them that goes beyond the contract will/can get sued.
3M's Cubitron II, described as "an industrial abrasive that cuts faster, lasts longer, sharpens itself, and requires less elbow grease than any other abrasive on the market" is an example of:
a. a(n) innovation created through a cooperative strategy.
b. imitation of a competitor's product.
c. an incremental innovation.
d. a novel innovation.
3M's Cubitron II is a novel innovation in industrial abrasives, offering unparalleled efficiency and self-sharpening technology that distinguishes it from competitors. The correct answer is d. a novel innovation.
3M's Cubitron II is an example of a novel innovation. Novel innovations represent significant leaps forward in technology or process, offering features and benefits not previously available, such as advanced cutting speed, longer lifespan, self-sharpening capabilities, and reduced physical effort compared to other abrasives on the market. These innovations often disrupt their respective industries by setting new benchmarks for performance and efficiency. The description highlights several key features that differentiate Cubitron II from other abrasives on the market, such as its ability to cut faster, last longer, sharpen itself, and require less effort. These features suggest a significant advancement or breakthrough in abrasive technology, making it a novel innovation.
Town Crier has 10 million shares of common stock outstanding. 2 million shares of preferred stock outstanding, and 10 thousand bonds. If the common shares are selling for $28 per share the preferred shares are selling for $15.50 per share, and the bonds are selling for 97 percent of par, what would be the weight used for debt in the computation of Town Crier's WACC? Multiple Choice O
A. 30 percent
B. 312 percent
C. 3.20 percent
D. 3.33 percent
The weight used for debt in Town Crier's WACC is calculated by dividing the total debt by the sum of the market values of common stock, preferred stock, and debt, resulting in about 3.02%, which corresponds to answer C. 3.20 percent.
Explanation:To calculate the weight used for debt in the computation of Town Crier's Weighted Average Cost of Capital (WACC), we need to first understand the market values of equity (both common and preferred) and debt. The company has 10 million common shares outstanding at $28 each, 2 million preferred shares at $15.50 each, and 10 thousand bonds selling for 97% of par. Assuming each bond has a par value of $1,000 (which is typical but not stated in the question), the total market value of each component is as follows:
Common Stock: 10,000,000 shares * $28 per share = $280,000,000Preferred Stock: 2,000,000 shares * $15.50 per share = $31,000,000Bonds: 10,000 bonds * $1,000 par value * 97% = $9,700,000To find the weight of debt in the WACC calculation, we divide the total debt by the sum of the market values of debt and equity:
Weight of Debt = Debt / (Common Stock + Preferred Stock + Debt) = $9,700,000 / ($280,000,000 + $31,000,000 + $9,700,000) = $9,700,000 / $320,700,000 ≈ 0.03023, or 3.02%
So, the correct answer is C. 3.20 percent.
Auditors found that the entity has not capitalized a material amount of leases in the financial statements. When considering the materiality of this departure from GAAP, the auditors would choose between which reporting options?
a. Unmodified opinion or disclaimer of opinion.
b. Unmodified opinion or qualified opinion.
c. Unmodified opinion with an emphasis-of-matter paragraph or an adverse opinion.
d. Qualified opinion or adverse opinion.
Answer:
d. Qualified opinion or adverse opinion.
Explanation:
A qualified opinion is used in an auditor's report that accompanies this entity audited financial statements. It is an auditor's opinion that suggests this entity has not capitalized a material amount of leases in the financial statements and there is a materiality of departure from the generally accepted accounting principles (GAAP) .
The adverse opinion is when an entity needs to reiterate and complete another audit of its financial statements.
In order for a country to progress from a less developed country (LDC) to a moderately developed country (MDC), the country would have to:_________.
a) stationary sources and volcanoes.
b) construction and transportation.
c) incinerators and transportation.
d) raise the per-capita income.
Answer:
d) raise the per-capita income
Explanation:
A less developed country is a country with a low per capita income. They usually don't have a sustainable development.
A moderately developed country is a country that has a per capita income of between $1000 - $12,000.
Per Capita income = GDP / population
I hope my answer helps you.
The following information is available for Chap Company.Sales: 350,000Cost of goods sold: 120,000Total fixed expenses: 60,000Total variable expenses: 100,000Which amount would you find on Chap's CVP income statement?A. Contribution margin of $250,000B. Contribution margin of $190,000C. Gross profit of $230,000D. Gross profit of $190,000
Answer:
A. Contribution margin of $250,000 and C. Gross profit of $230,000.
Explanation:
Sales = $350,000
Cost of goods sold = $120,000
Total fixed expenses = $60,000
Total variable expenses = $100,000
Therefore,
Gross profit = Sales - Cost of goods sold
= $350,000 - $120,000
= $230,000
Contribution margin = Sales - Total variable cost
= $350,000 - $100,000
= $250,000
The right options are A. Contribution margin of $250,000 and C. Gross profit of $230,000.
When Whitney took over her father's sporting goods store, she evaluated some of her father's vendor relationships. She found that Rodney's Exercise Wear wasn't particularly profitable for the store. Although committed, his products were expensive, and he seemed inflexible. Whitney tried to work out a more amicable relationship with him by discussing her sales goals and new ideas for the coming year, but Rodney seemed uninterested. Which of the following elements crucial for maintaining strategic relationships is absent in the given example?
Answer:
Open Communication
Explanation:
In business, open communication is really the capacity of anyone to obtain, access and share communication resources on one level in order to provide value-added facilities on yet another level in a layered communication system architecture under equal conditions with a transparent relationship between cost and pricing.
It is important for business because it encourages your staff to become more involved and recognize that what they are doing counts to business success.
With regard to health and safety at workplace, _____ can be defined as the probability of harm. a. obstacles b. impediments c. risks d. barriers
Answer:
c. risks
Explanation:
Risk is the exposure to dangerous conditions or the possibility of getting injured or incurring a loss. The term risk is used in many disciplines to express potential hazardous situations. There exist financial risks associated with investments, safety and health risks, and other risks such as the loss of employment.
In the workplace, there is always the probability of suffering injuries while performing official duties. Machines, equipment, and tools have the potential to inflict severe bodily damages or fatalities in the workplace. The possibility of suffering injuries a risk to the workers.
The Iowa legislature passed a law banning trucks 65 feet long or longer from operating on its roads and highways because big trucks do more damage to roads than smaller trucks and are involved in more serious accidents. Consolidated Freightways (CF) drove big trucks through Iowa on a regular basis, and these trucks were legal in other states. Switching to smaller trucks for trips through Iowa was inconvenient and costly. CF filed a lawsuit contending that the statute was unconstitutional. The court most likely found that the Iowa statute was:
Answer:
unconstitutional under the "dormant" commerce clause.
Explanation:
The Commerce Clause (Article 1, Section 8, Clause 3 of US Constitution) state that Congress has the power "to regulate commerce with foreign nations, and among the several states, ..."
The dormant commerce clause refers to limitations on state powers, which cannot pass any law that excessively burdens or discriminates against interstate commerce. Only Congress has the power to regulate interstate commerce.
When shopping for clothing such as shirts and jeans, Tyrone only buys products from Eastern Clothing Company even if there are several other companies that offer similar products at lower prices. Tyrone's preference for Eastern Clothing Company demonstrates:_____________.
(A) lack of demand.
(B) bargaining power.
(C) risk of entry.
(D) brand loyalty.
(E) lack of economies of scale
Answer:
D) brand loyalty
Explanation:
The Eastern Clothing Company represents a brand and Tyrone‘s preference for clothing from that company represents his loyalty towards the brand.
Final answer:
Tyrone consistently choosing Eastern Clothing Company for his clothing purchases, even when there are less expensive alternatives, exemplifies brand loyalty, a common phenomenon in monopolistically competitive markets.
Explanation:
Tyrone's preference for only buying products from Eastern Clothing Company despite there being several other companies that offer similar products at lower prices demonstrates brand loyalty. This concept is key in a monopolistically competitive market, where products are highly differentiated and consumer loyalty can serve as a barrier to entry for other firms. Brand reputation that has been built up over many years can make consumers less sensitive to price changes, and more attached to a certain brand, often perceiving the goods to be different for reasons that surpass just the price.
Kelvin is an agent for Lookout Mountain Accountants, Inc. On Lookout's behalf and at its request, Kelvin pays Nerdlinger for custom software designed for the management of Lookout's services. Kelvin's right to obtain the amount of those payments from Lookout arises under the principal's duty of.
Answer:
D) reimbursement.
Explanation:
The principal's duty to reimburse states that the principal must reimburse the agent all the reasonable expenses that he/she incurred in while performing his/her duties. The costs that should be reimbursed include: travel costs, meals, lodging, incidental expenses, etc.
The amount that Kelvin paid Nerdlinger is considered a reasonable expense since it will benefit Lookout Mountain Accountants, therefore the principal must reimburse the payment.
"The correct answer is: The principal's duty of indemnification.
In the given scenario, Kelvin is acting as an agent for Lookout Mountain Accountants, Inc. (the principal). When an agent makes payments on behalf of the principal and at the principal's request, the principal has a duty to indemnify the agent for those payments.
This means that the principal is obligated to reimburse the agent for any expenses or liabilities incurred while carrying out the principal's instructions.
The duty of indemnification is a fundamental aspect of the agency relationship. It ensures that agents are not left out of pocket for legitimate expenses they incur in the course of their agency duties. In this case, since Kelvin paid Nerdlinger for custom software at Lookout's request, Kelvin has the right to be indemnified by Lookout for the amount paid.
An investor has a portfolio of blue-chip stocks and anticipates stability in the market with the possibility of minor declines. This investor decides to write covered calls on the securities held in the portfolio. What is the result of this action?[A] The investor gains leverage on the underlying security by writing options contracts.[B] The investor is guaranteed not to lose premiums on the positions because the options are covered.[C] The investor can expect exercise notices on the calls if the price of securities held in the portfolio goes down.[D] The investor can expect income from the premiums received when selling the covered calls.
Answer:
D) The investor can expect income from the premiums received when selling the covered calls.
Explanation:
When an investor sells covered calls, but believes that the market will remain very stable, he/she is making money by selling the calls since they shouldn't be used. By selling the calls the investor is not gaining leverage and probably will end up not selling the stocks.
If the stock prices decrease, the options will expire and if the price increases, the investor would end up selling the stock and maybe even losing money. But the key factor is that the stock price should remain stable, therefore the investor earning from selling something he/she believes is useless to other investors.
A perpetual record of a raw materials item that records data on the quantity and cost of units purchased, units issued for use in production, and units that remain in the raw materials inventory, is called a(n):_____________
A. Materials ledger card.
B. Materials requisition.
C. Purchase order.
D. Materials voucher.
E. Purchase ledger.
Answer:
The correct answer is A. Material Ledger Card.
Explanation:
A materials ledger card is a subsidiary record of a raw materials item that stores data on the quantity and cost of units purchased, units issued for use in production, and units that remain in the raw materials inventory.
In other words, it is record of how many units of raw materials are ordered from vendors, how many units are in storage, and how many have been transferred to the production line.
A small company is setting up a new remote satellite office. Employees in the remote office need to access network resources from the main office of the company. An IT manager is deciding whether to deploy thin or thick clients at the remote office. What is the key technical factor to be considered?
Final answer:
The key technical factor to consider when deciding between thin and thick clients at a remote office is network bandwidth.
Explanation:
The key technical factor to be considered when deciding whether to deploy thin or thick clients at a remote office is the network bandwidth. Thin clients rely heavily on network resources as most of the processing is done on the server, while thick clients have more processing power and can handle tasks locally. If the network bandwidth is limited, thin clients may lead to performance issues as they require constant communication with the main office to access resources. On the other hand, if the network bandwidth is sufficient, thin clients can be a cost-effective solution as they require less hardware and are easier to maintain.
Final answer:
The key technical factor in deciding between thin and thick clients for a new remote satellite office is the quality of the network connection to the main office, considering aspects like reliability, bandwidth, and security. This fits into larger strategic IT decision-making about centralization versus decentralization and requires input from both IT and business managers.
Explanation:
When deciding between deploying thin clients or thick clients in a new remote satellite office, the key technical factor to consider is the quality of the network connection between the remote office and the main office. Thin clients rely heavily on a strong, consistent network connection because they primarily run applications and process data that are stored on servers at the main office. Thick clients, on the other hand, have more local processing power and storage, which allows them to function more autonomously from the central servers.
The IT manager must consider factors such as network reliability, bandwidth, and latency, as these will impact the performance of the thin clients. Another consideration is data security, as a robust network connection to the main office is also a pathway through which security threats could travel. Therefore, the choice between thin and thick clients should be based on a balance of network infrastructure capabilities and security measures.
This decision should also align with the organization's strategic IT goals, whether that be centralization for cost efficiency and synergy, or decentralization for innovation and rapid response to market changes. Insightful collaboration between IT and business managers can lead to better decision-making in this regard.
Which of the following is not an assumption of the productions possibilities frontier?
a. A country produces only two goods or types of goods.
b. Technology does not change.
c. The amount of available resources does not change.
d. There is a fixed quantity of money.
Answer: Option D
Explanation: A frontier of development possibilities determines the set of choices made by society for the mixture of goods and services it can create, given the available resources capacity. Usually considered for an economy, this balancing act extends to every ordinary citizen, and the economic institution as well.
This curve depicts the fact that only by reallocating resources from other goods and thus producing less of them can one good be produced as the resources in hand for production is limited.
Hence from the above we can conclude that the correct option is D.
A closing is set for March 15, the next tax payment is due April 1. How many months of escrow can the lender take for taxes?
Answer
the correct answer is three month
True or False. The primacy effect refers to the tendency to recall the items at the beginning and end of a list better than the items in the middle.
Answer:
The correct answer is the option: False.
Explanation:
To begin with, the primacy effect, in the fields of psichology and sociology is known as a cognitive bias and is part of a serial-position effect among with the recency effect. Moreover, the term refers to the tendency to recall the information at the beginning only of a list better that the information in the middle and at the end of that same list.
Secondly, the recency effect is the one that establishes that a person tends to recall the items at the end better that the items at the beginning or middle.
Tiffany Crowe works as a showroom executive at a clothing boutique in London. Today, she is in a positive mood and instantly greets and smiles at a customer who walks into the store. The customer feels welcomed by her response. While browsing the store, Crowe helps the customer with products and passes on her positive mood to the customer. The customer leaves the store feeling content with a smile on her face.
Which of the following best describes this situation?
A) emotional contagion
B) positivity offset
C) cognitive dissonance
Option A, Emotional contagion
Explanation:
The concept of emotional contamination in one person is the direct activation of similar emotions and actions in others.
Feelings may be conveyed indirectly or directly through individuals in several different ways.
There's also important evidence that people display feelings associated with other people's facial, auditory and postural gestures. If you imitate the body, you will hear what you say. Then, you feel what another person feels.
The written disclosure document that must be furnished by a solicitor to a client under the Investment Advisors Act of 1940 must include all of the following except
[A] any service that the solicitor will be providing to the client[B] the compensations that the solicitor will receive[C] the name of the broker dealer that will affect the trades[D] the name of the investment advisors that will be providing advisory service
Answer:
C) the name of the broker dealer that will affect the trades
Explanation:
Solicitors must present a separate disclosure that must include the name of the solicitor and the services he/she provides, the name of the investment advisor for whom the solicitor is working, and the nature of the relationship between the solicitor and the investment advisor. The compensation agreement must also be included, along with any amount that the client will be charged in addition to the advisory fee.
In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice?
A. what quantity to produce
B. what price to charge
C. what quantity of labor is needed
D. what quality to produce
Answer:
The correct answer is D. what quality to produce.
Explanation:
The world of perfect competition is a world of price-acceptors. A perfectly competitive company sells a homogeneous product (identical to that sold by others in the industry). It is so small in relation to its market that it cannot influence the market price; Just consider it given. When a farmer sells a homogeneous product such as wheat, it is sold to a large number of buyers at the market price of the quintal. In the same way that consumers must generally accept the prices charged by Internet providers or cinemas, so competitive companies must accept the market prices of the wheat or oil they produce.
Employees with _____, in which work output is exchanged back and forth among individuals, should be organized into teams to facilitate coordination in their interwoven relationship.
Answer: Reciprocal Interdependence.
Explanation:
Reciprocal Interdependence is a working situation in which the output of a department of an organization forms the direct input used by another department in the same organization.
In organizations functioning with reciprocal interdependence, the various departments have to form strong interwoven relationship to increase effectiveness and productivity.
Banks work to earn a profit by selling financial services Group of answer choices True or false?
Answer:
True
Explanation:
Financial services are the activities rendered by any financial institution such as the banks to their customers. Most of the services are done at a fee that makes the main source of revenue for banks. The revenue is spent to pay the overall expenses of the bank. If the expenses are lower than the revenue, a bank makes profit. If expenses exceed revenue, a bank makes loss which is not mostly the case. Therefore, it is true to say that banks work to earn a profit by selling financial services.
The Keynesian Theory "Bathtub" is illustrated below. Decreasing flows in one or more of the spending variables (C, I, G or NX) will, ceteris paribus, __________ the income, employment, and output (water level in the tub).a. increaseb. decreasec. maintaind. none of the above
Answer:
B) decrease
Explanation:
The Keynesian Bathtub Theory is an analogy between the economy and a bathtub where increases in government spending, consumption, business investments and exports, are shown as water flows into the bathtub. Decreasing spending will decrease the inflow of water into the bathtub which will result in lower income and employment.
Which of the following statements is not correct?
A) In a long-run equilibrium, marginal firms make zero economic profit.
B) To maximize profit, firms should produce at a level of output where price equals average variable cost.
C) The amount of gold in the world is limited. Therefore, the gold jewelry market probably has a long-run supply curve that is upward sloping.
D) Long-run supply curves are typically more elastic than short-run supply curves.
Answer:
B) To maximize profit, firms should produce at a level of output where price equals average variable cost
Explanation:
Firms maximize their profit by equating Marginal revenue with The Marginal cost. So, since for perfectly competitive firms, the price equals the Marginal revenue, for these firms profit is maximized by equating Price with Marginal cost not the average variable cost.
The statement 'To maximize profit, firms should produce at a level of output where price equals average variable cost.' is incorrect. Instead, to maximize profit, firms should produce where marginal cost equals marginal revenue.
Explanation:The statement B) 'To maximize profit, firms should produce at a level of output where price equals average variable cost.' is not correct. To maximize profit, firms should produce at a level of output where marginal cost equals marginal revenue, not average variable cost.
The other statements A) 'In a long-run equilibrium, marginal firms make zero economic profit,' C) 'The amount of gold in the world is limited. Therefore, the gold jewelry market probably has a long-run supply curve that is upward sloping,' and D) 'Long-run supply curves are typically more elastic than short-run supply curves' are correct as per standard economic theory.
Statement A refers to the characteristic of a perfectly competitive market where in the long run, firms make zero economic profit because any profit opportunities are eroded by the entry of new firms.
Statement C is correct because when the supply of a resource is limited, increasing the output of products using that resource becomes costlier, causing the supply curve to slope upwards.
Statement D illustrates that in the long run, firms have more flexibility to adjust to changes, making the supply more elastic.
Learn more about Economic Theory here:https://brainly.com/question/32399741
#SPJ6
Assume the following information for Thomas Company:
Deluxe Chair:
Contribution margin per chair = $80
Machine hours to produce 1 chair = 2 hours
Executive Chair:
Contribution margin per chair = $90
Machine hours to produce 1 chair = 4 hours
Machine hours is the constraint resource.
What is the contribution margin per machine hour?
Well if you want to know that you have to do this:
-----------------------------------------------------------------------------
Margin per chair = $80
Machine hours to produce 1 chair = 2 hours
Multiply: 80 x 2 = 160
Deluxe Chair: 160
------------------------------------------------------------------------------
Margin per chair = $90
Machine hours to produce 1 chair = 4 hours
Multiply: 90 x 4 = 320
Executive Chair: 320
--------------------------------------------------------------------------------
Contribution Margin: $90 and $80
Add: 90 + 80 = 170
Contribution Margin: $170
---------------------------------------------------------------------------------
Machine Hours: 2 and 4
Add: 2 + 4 = 6
Machine Hours: 6 hours
---------------------------------------------------------------------------------
So, their is $170 contribution margin per 6 hours.
Hope this helps XD