Finance final

QUESTION 5: Kai decides to keep his price the same and add color, increasing variable costs by $0.40 per issue. What is the percent increase in unit volume (copies per issue) required to maintain $500 profits and cover the increased fixed and variable

• Net profit margin has been negative and no major patterns over the 9 year period on net profit since the trend of the industry is based mostly on economic factors, and whether or not they secure contracts. Due to high percentage of COGS they are only left with a net profit of $980 or

The break-even point in units for computer paper is $52,000.00. Meaning to break-even, you have to sell $52,000.00 of units of computer paper. “The margin of safety, expressed in either dollars or a percentage, shows how much sales can be reduced without sustaining losses” (Schneider, 2012). The formula to find margin of safety in dollars is: margin of safety in dollars equals the actual (or expected) costs minus the break-even costs. So in the case of computer paper. The actual cost of $30,000.00 minus the break-even point of $52,000.00 gives you the margin of safety of -$22,000.00. Meaning you can cut the sales of computer paper by $22,000.00 and not sustain a loss.

In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.

You have until the end of class to finish this test. The questions should be fairly self-explanatory, however, if you have a question ask.

This quiz review covers materials from Weeks 1 and 2. Your quiz will be in Week 3 located in the Quiz Tab. Your quiz will mostly comprise of multiple choice, true/false, and essay questions. The answers are at the end of the questions.

Explanations: 5. b. Gross profit = $2,505 (Sales revenue $4,319 – Cost of goods sold $1,814)

The revenue is $600,600*1.2= $720,720. The variable cost changes as sales increases and fixed cost stays the same, the gross profit is $175,500. After tax, the net income is $100,557.

Second City Options (SCO) is a small firm that specializes in option trading. Employing 35 people, SCO is located on LaSalle Street in the Chicago financial district. It is a member firm of the Chicago Board Options Exchange (CBOE), where it trades options on stocks and stock indices. It is also a member firm of the Chicago Mercantile Exchange Group (CME Group), where it trades options on futures and the underlying futures contracts.

| This assesses a company’s financial durability by examining whether it is at least profitable enough to pay off its interest expenses.

then create a formula similar to this .53 = 530,000 - 1,000,000 as you can see, Dean 's operating income is $530,000 (Net sales – all operating expenses). According to the formula used, Dean’s operating margin is .53. By taking that away from 110 this means that 57 cents on every dollar of sales are used to pay for variable costs. Only 53 cents remains to cover all non-operating expenses or fixed costs.

3. Assume that cost of goods sold for a company consists only of variable costs and gross margin is = (revenue – cost of goods sold)/revenue. Which of the following is true

An outside supplier has offered to make the part and sell it to the company for $32.30 each. If this offer is

We want to know the amount aluminum cans account for in the cost of sales. According to the provided information cans account for 60% of net revenues. Net revenue in 1994 will be $231,207 * 1.04 = $240,455. The cans contribute 0,60 * $240,455 = $144,273. With a gross margin on cans of 27% the cost of sales of aluminum cans for 1994 is

ii) Answer PART B, C and D in the Answer Booklet. Start each answer on a new page.