What would be the impact on profits

Assignment Help Finance Basics
Reference no: EM13263238

Sweet Treats Company has a capacity of 40,000 units per year and is currently selling 35,000 for $400 each. Lucky Company has approached Sweet Treats about buying 2,000 units for only $300 each. The units would be packaged in bulk, saving Sweet Treats $20 per unit when compared to the normal packaging cost. Normally, Sweet Treats has a variable cost of $280 per unit. The annual fixed cost of $2,000,000 would be unaffected by the special order. What would be the impact on profits if Sweet Treats were to accept this special order?

A.
Profits would increase $40,000.
B.
Profits would increase $60,000.
C.
Profits would decrease $200,000.
D.
Profits would increase $80,000

 

Reference no: EM13263238

Questions Cloud

What is the value of the firm : A firm has 110,000 shares of stock outstanding. The firm is considering borrowing $1.5 million at 7.5% interest and using the loan proceeds to repurchase 30,000 shares of stock. What is the value of the firm? Ignore taxes.
What is the total kinetic energy of the sphere : A solid sphere with mass m = 1.5 kg a radius r = 0.20 m rolls without slipping on a flat surface with an angular velocity of ? = 7.2 rad/s. What is the total kinetic energy of the sphere
What price should the company charge : If demand falls to 86,900 units and the company wants to continue to earn a 0.40 return, what price should the company charge?
What to expect the difference in the vbe values to be : Two transistors have EBJ areas as follows: AE1 = AE1 = 400μm x 400μm and AE2 = 0.4μm x 0.2μm. If the two transistors are operated in the active mode and conduct equal collector currents
What would be the impact on profits : Normally, Sweet Treats has a variable cost of $280 per unit. The annual fixed cost of $2,000,000 would be unaffected by the special order. What would be the impact on profits if Sweet Treats were to accept this special order?
Determine the emf induced in the wire : Consider a rectangular metal loop of length of 0.15m and width of 0.08m. Determine the emf induced in the wire on the left side of the loop
What amount of shipping department costs : During the period, the Far East sales office generated 669 orders for a total of 6,190 items. These orders were shipped in 1,450 boxes. What amount of shipping department costs should be allocated to these sales?
Determine the direction of the net force : Three people pull simultaneously on a stubborn donkey. Jack pulls eastward with a force of 82.1 N, Jill pulls with 64.3 N in the northeast direction, What is the direction of the net force
What is the probability a generator will break down : The length of time until the breakdown of an essential piece of equipment is important in the decision of the use of auxiliary equipment

Reviews

Write a Review

Finance Basics Questions & Answers

  Effective cost of trade credit and annual interest rate

The D. J. Masson Corporation needs to raise $500,000 for 1 year to supply working capital to a new store. What is the effective annual interest rate of the costly trade credit?

  Find the present value

Find the present value of $3,600 under each of the following rates and periods. (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.)

  Computation of the weighted average cost of capital

Computation of the weighted average cost of capital and Jake's Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share

  How much life insurance should he buy

And then rounding up to the next $50,000 how much life insurance should he buy?

  Calculate the value of a bond

Determine the value of a $1,000 bond which has ten years until maturity and pays quarterly interest at an annual coupon rate of 12%. The required return on similar-risk bonds is 20 percent.

  Determine the cause of significant variances

At the beginning of the year, Frigicor estimated that corporation would produce 480 refrigeration units during the year. Yearly fixed overhead costs were estimated to be $600,000,

  Foreign exchange and global finance-purchasing power

Describe the theoretical perspectives of PPP and empirical evidence in testing PPP. To what extenet PPP may or may not hold in the real world? To what extent does it hold in the real world? Please give  various of factors that contribute to the depar..

  Calculate total contribution margin

Baker Corporation has a product that sells for $20 per unit. The variable costs are $12 per unit, and fixed costs total $30,000 every year.

  Determine the stock with higher real rate of return

The Costaguanan stock market provided a rate of return of 95%. The inflation rate in Costaguana during the year was 80%. In the United States, in contrast, the stock market return was only 12%, but the inflation rate was only 2%.

  Merger and acquisitions critique

Read: Enhancing the success of mergers and acquisitions: an organizational culture perspective - Mike Schraeder

  How much would you have to invest now to meet your goal

An investment opportunity offers to pay out $116 two years for now. In order to receive this payout, you must invest $81 today. What annual rate of return is this investment offering? Put your answer in decimal form and round to four decimal pl..

  What are the portfolio weights

Considering the effects of diversification, how should Sarah respond to the suggestion that you invest 100 percent of your 401(k) account in East Coast Yachts stock?

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