E25.6 (LO 2), AN Writing The actual selling expenses incurred in March 2022 by Fallon Company are as follows.Variable ExpensesFixed ExpensesInstructionsSales commissionsAdvertisingTravelDelivery$11,000Sales salaries6,900Depreciation5,1003,450Insurance$35,0007,0001,000a. Prepare a flexible budget performance report for March using the budget data in E25.5, assuming that March saleswere $170,000.b. Prepare a flexible budget performance report, assuming that March sales were $180,000.c. Comment on the importance of using flexible budgets in evaluating the performance of the sales manager.Prepare flexible budget.

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Answered: E25.6 (LO 2), AN Writing The actual…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Jamie is considering leaving her current job, which pays $75,000 per year, to start a new company that develops applications for smart phones. Based on market research, she can sell about 50,000 units during the first year at a price of $4 per unit. With annual overhead costs and operating expenses amounting to $145,000, Jamie expects a profit margin of 20 percent. During the first year, Jamie is using her savings to cover total costs. Current annual rate of return on saving is 2.1%. This margin is 5 percent larger than that of her largest competitor, Apps, Inc. If Jamie decides to embark on her new venture, Accounting costs: Economic costs: Opportunity costs:
Jamie is considering leaving her current job, which pays $75,000 per year, to start a new company that develops applications for smart phones. Based on market research, she can sell about 50,000 units during the first year at a price of $4 per unit. With annual overhead costs and operating expenses amounting to $145,000, Jamie expects a profit margin of 20 percent. During the first year, Jamie is using her savings to cover total costs. Current annual rate of return on saving is 2.1%. This margin is 5 percent larger than that of her largest competitor, Apps, Inc. Accounting costs? Economic costs? Opportunity costs? Suppose that Jamie’s estimated selling price is lower than originally projected during the first year. How much revenue would she need in order to earn positive accounting profits? Positive economic profits?
Many retirement funds charge an administrative fee equal to 0.25% on managed assets. Suppose that Alex and Spenser each invest $50,000 in the same year. Alex invests in a no-load fund (that doesn’t charge the 0.25% fee) and earns 5% a year. Spenser uses another retirement fund that charges the 0.25% fee and so only earns 4.75%. After 30 years, how much more will Alex have than Spenser?
Chapter 6 Templates Page 184 The following figure shows plots of monthly rates of return and the stock market for two stocks. (LO 6-5) a. Which stock is riskier to an investor currently holding a diversified portfolio of common stock? b. Which stock is riskier to an undiversified investor who puts all of his funds in only one of these stocks? Templates and spreadsheets are available in Connect mheducation.com/parser php?secload36.f&fake&print
As part of an estate settlement Katie received S1 million. She decided to use the money to purchase a small business. Her business operates in a perfectly competitive industry. If Katie would have invested the $1 million in a risk free bond fund, she could have earned $100,000 worth of interest each year. She also quit her job to devote all her time to her new business. Her salary at her former job was $ 75,000 per year. At the end of the first year of operating her new business, Katie's accountant reported an accounting profs of S175,000. What was Katie's economic profit ? A.$ 50,000 B. $ 0 C. $25,000 D. $100,000
2. A man formerly employed as chief mechanic of an automobile repair shop has saved P1,000,000.00 which are now invested in certain securities giving him an annual dividend of 15%. He now plans to invest this amount in his own repair shop. In his resent job, he is earning P25,000.00 a month, but he has to resign to run his own business. He will need the services of the following: 2 mechanics each earning P400.00 a day, and 8 helpers each earning P200.00 a day. These men will work on the average 300 days per year. His other expenses are the following: Rental Miscellaneous Sales tax P30,000.00 a month P25,000.00 a month 3% of gross income 2% Insurance The length of his lease is 5 years. If the average charge for each car repaired by his shop is P1,000.00. Determine the number of cars he must service in one year so that he will obtain a profit of at least 20% on his investment? Find: Number of cars he must service in one year
Cora, a carpenter, worked for a home construction business and earned $66,700 per year. Cora quit her job to start her own business. To buy the necessary equipment, she borrowed $50,000 from her bank, whom she pays 8.0 percent interest per year. Last year she paid $72,300 for materials, $12,400 for operating expenses and paid all of the interest on the loan from her bank. She had revenue of $156,800. For last year, Alfred, the accountant, says Cora’s profit is _________ and Evelyn the economist says Cora's profit is ___________. A. more than $69,000 but less than $75,000; more than $1,200 but less than $1,750 B. more than $65,000 but less than $69,000; more than $1,200 but less than $1,750 C. more than $65,000 but less than $69,000; more than $4,500 but less than $6,250 D. more than $69,000 but less than $75,000; more than $4,500 but less than $6,250 E. None of the above.
Paolo lives in New York City and runs a business that sells boats. In an average year, he receives $723,000 in revenue from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of $423.000; he also pays wages and utility bills totaling $267.000. He owns his showroom; if he chooses to rent it out, he will receive $2.000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Paolo does not operate this boat business, he can work as a financial advisor and receive an annual salary of $20,000 with no additional monetary costs. No other costs are incurred in running this boat business. Identify each of Paolo's costs in the following table as either an implicit cost or an explicit cost of selling boats. Implicit Cost Explicit Cost The rental income Paolo could receive if he chose to rent out his showroom The wholesale cost for the boats that Paolo pays the manufacturer The salary Paolo could earn if he worked as a…
Sean lives in San Diego and runs a business that sells pianos. In an average year, he receives $724,000 in revenue from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $424,000; he also pays wages and utility bills totaling $266,000. He owns his showroom; if he chooses to rent it out, he will receive $4,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Sean does not operate this piano business, he can work as a paralegal and receive an annual salary of $21,000 with no additional monetary costs. No other costs are incurred in running this piano business. Identify each of Sean's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The wages and utility bills that Sean pays The rental income Sean could receive if he chose to rent out his showroom The salary Sean could earn if he worked as a paralegal The wholesale cost for the…
Antonio lives in Denver and runs a business that sells boats. In an average year, he receives $842,000 from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of $452,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $38,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Antonio does not operate this boat business, he can work as an accountant, receive an annual salary of $48,000 with no additional monetary costs, and rent out his showroom at the $38,000 per year rate. No other costs are incurred in running this boat business. Identify each of Antonio's costs in the following table as either an implicit cost or an explicit cost of selling boats. Implicit Cost Explicit Cost The wholesale cost for the boats that Antonio pays the manufacturer The wages and utility bills that Antonio pays The rental income Antonio could…
Felix lives in San Francisco and runs a business that sells pianos. In an average year, he receives $711,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $411,000; he also pays wages and utility bills totaling $279,000. He owns his showroom; if he chooses to rent it out, he will receive $1,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Felix does not operate this piano business, he can work as a financial advisor and receive an annual salary of $31,000 with no additional monetary costs. No other costs are incurred in running this piano business. Identify each of Felix's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The salary Felix could earn if he worked as a financial advisor The wages and utility bills that Felix pays The rental income Felix could receive if he chose to rent out his showroom The…
Suppose that you are obtaining a personal loan from your uncle in the amount of $20,000 (now) to be repaid in two years to cover some of your college expenses. If your uncle usually earns minimum 8% profit (annually) on his money, which is invested in various sources. 1) What minimum lump-sum payment two years from now would make your uncle happy? 2) If you pay yearly, how much should you pay each year? 3) If you pay every six months, how much should you pay every six months?

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