What happens to its profits if it accepts the offer

Assignment Help Finance Basics
Reference no: EM131146712

Computer Products Corp. sells peripheral equipment used by both private businesses and the government. Due to a recession, Computer Product's sales have declined by 100,000 units and it now has 200,000 units of excess capacity. All of its current sales are to private sector customers and each pays $12.00 per unit for the equipment. The sales price is equal to 150% of average variable costs. A government agency has offered to purchase 300,000 units at $10.00 each. If Computer Products accepts the offer, it will not be able to fill 100,000 units of its expected orders from private sector customers over the next few months, although the inability to meet customer demand is not expected to affect future sales.

a. Should Computer Products accept the offer to supply 300,000 units at $10 each to the government agency? What happens to its profits if it accepts the offer?

b. Would your answer change if the inability to meet private sector customer demand reduces sales of 50,000 during this (ignore any effects beyond this period)?

Reference no: EM131146712

Questions Cloud

What are the five characteristics of good job design : What are the differences among job enrichment, job enlargement, job rotation, job specialization, and employee empowerment?
Discuss in detail the evolution of advertising : Discuss in detail the evolution of advertising for Under Armour. How did Under Armour's advertising efforts begin and what is the company doing today? Include television, print, and social media for Under Armour in your answer.
Critically and effectively assess the value of theories : Critically and effectively assess the value of theories, concepts and models to the practices of the service sector and how they manage service quality
Utilize critical thinking in your personal-professional life : Describe the significant ways in which you would be able to utilize critical thinking in your personal and professional life. Discuss at least two (2) key concepts that you felt were most impactful to you this term and the manner in which you might u..
What happens to its profits if it accepts the offer : a. Should Computer Products accept the offer to supply 300,000 units at $10 each to the government agency? What happens to its profits if it accepts the offer? b. Would your answer change if the inability to meet private sector customer demand reduce..
Show how these two chainages were determined : Figure 13.18 shows proposed curb locations, together with offset stakes for the north-side curb. The straight section of curb begins at station 0 + 15 and ends at station 2 + 10. With the aid of a sketch, show how these two chainages were determin..
Why is there a social cost to monopoly power : Why is there a social cost to monopoly power? If the gains to producers from monopoly power could be redistributed to consumers, would the social cost of monopoly power be eliminated? Explain briefly.
The inspection department of a chemical packaging plant : Three segments (A, B, and C) of Trump Enterprises have net sales of USD 300,000, USD 150,000, and USD 50,000, respectively. A decision is made to allocate the pool of USD 25,000 of administrative overhead expenses of the home office to the segments, ..
Globalisation and multinational firm host country relations : At its half yearly meeting a number of issues were raised. You are required to write a 2500 word report responding to the following requests.

Reviews

Write a Review

Finance Basics Questions & Answers

  Assignment on the market structure

You have been hired as a consultant by your local mayor to look at the various market structures. Your role is to provide analysis and answers to these important questions that will help the mayor understand the structures of many of the businesse..

  Valuing residential real estate

Sarah Fluggel is considering the purchase of a home located at 2121 Tarter Circle in Frisco, Texas. The home has 3,000 square feet of heated and cooled living area, and the current owners are asking a price of $375,000 for it.

  Why is credit card financing attractive to entrepreneurs

Why is credit card financing attractive to entrepreneurs? What are the risks?

  Hizar company a retail store has an accounts receivable

hizar company a retail store has an accounts receivable turnover of 4.5 times. the industry average is 12.5 times.

  Assume that if students buy more than 250 of art supplies

1. the artistrsquos palette recognizes that students may purchase supplies at the beginning of the term to cover all of

  What is the expected return on portfolio

You own a portfolio the has $2,950 invested in stock A and $3700 invested stock B. if the expected return on these stokes are 8% and 11% , respectively what is the expected return on portfolio?

  Bond yield to maturity

1. Suppose a 10 year, $1000 bond with a 11% coupon rate and semiannual coupons is trading for the price of 907.37 a) What is the bond yield to maturity (EXPREES as an APR with semiannual compounding)  b)  if the bond's ytm changes to 8% APR What w..

  Find the average value above which only 15 percent would lie

The average and standard deviation of the amount of Goods and Services tax remitted by performance artists in a twelve month period were $5.042 thous and $1.551 thous respectively. If a sample of 110 artists was taken, find the average value above wh..

  Which bond will give you the highest capital gain

What is the duration if the yield to maturity is 8.0% - Which bond will give you the highest capital gain?

  What is the monthly payment that can be made from this fund

The fund will disburse monthly for 12 years, and the desired cash balance at the end of 12 years is $1,000,000. What is the monthly payment that can be made from this fund?

  Explain the similarities and differences between tax

timothy is a 35 percent partner in the total partnership a calendar-year-end entity. timothy has an outside basis in

  What is the implied interest rate on a treasury bond

what is the implied interest rate on a treasury bond 100000 futures contract that settled at 10016? if interest rates

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd