Answer:
a. Accept the order
b. Increase in short-term profit of $50,000
Explanation:
<em>Note : Blowing Sand has "enough excess capacity" this means that fixed cost will be the same in the range or they will be ocurred whether or not the special order is accepted.</em>
Therefore fixed costs are Irrelevant for this decision.
<u>Incremental Costs and Revenues - accept the special order</u>
Sales ( 10,000 units × $22 each) $220,000
<em>Less</em> Variable Costs ( 10,000 units × $17each) ($170,000)
Net Income $50,000
The special order will result in an increase in short term profit of $50,000. Therefore, Blowing Sand Company should accept the order.
A.
Low credit scores usually indicate irresponsible spending behaviors.
Bobo's demand curve is elastic hence his purchasing ability is easily influenced by a slight change in the price of the product
Answer: Lindsay took out a Loan to purchase her new home. Lindsay also paid money in advance this is known as a down payment. If Lindsay dose not make her loan payment on time the bank will most likely foreclose.
Answer:
The sustainable growth rate is 16.52%
Explanation:
To compute the substantial growth rate, first, we have to calculate the retention ratio. The formula to compute the retention ratio is shown below:
= 1 – payout ratio
= 1 – 0.16
=0.84 or 84%
Now, we use the formula of substantial growth rate which is shown below:
= (Return on equity × retention ratio) ÷ { 1 - (Return on equity × retention ratio)}
where,
Return on equity = (Net income ÷ total equity) × 100
= ($3,640 ÷ $21,560) × 100
= 16.88%
= (16.88% × 84%) ÷ ( 1 - 16.88% × 84%)
= 0.141792 ÷ (1 - 0.141792 )
= 0.141792 ÷ 0.858208
= 0.1652 or 16.52%
