/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} 5BP_c Eaton Tool Company has fixed cos... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 2: 5BP_c (page 146)

Eaton Tool Company has fixed costs of \(255,000, sells its units for \)66, and has variable costs of $36 per unit.

c. Under the new plan, what is likely to happen to profitability at very high

volume levels (compared to the old plan)?

Short Answer

Expert verified

Under the new plan, profitability is more than the old plan until the break even point. Once the break even point is achieved the profitability under the old plan is more than the new plan. It is because the variable cost under old plan is less than the new plan. It means the new plan is more profitable only when the volume is high.

Step by step solution

01

Profit

Profit is the net income of the company. It is computed by deducting the variable and fixed cost from the gross revenue earned by the company.

02

Profitability under new plan in comparison of old plan

Variable cost under the new plan is more than the old plan. Due to this, after achieving the break-even point, the old plan is more profitable. As it would give more profit than the new plan

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Amigo Software Inc. has total assets of \(889,000, current liabilities of\)192,000, and long-term liabilities of \(154,000. There is \)87,000 in preferredstock outstanding. Thirty thousand shares of common stock have been issued.

a. Compute book value (net worth) per share.

b. If there is $56,300 in earnings available to common stockholders and the

firm鈥檚 stock has a P/E of 23 times earnings per share, what is the currentprice of the stock?

c. What is the ratio of market value per share to book value per share? (Round

to two places to the right of the decimal point.)

Assume the following data for Cable Corporation and Multi-Media Inc.

Capable corporation

Muli-media inc

Net income

\(31,200

\)140,000

Sales

317,000

2,700,000

Total assets

402,000

965,000

Total debts

163,000

542,000

Stockholder鈥檚 equity

239,000

423,000

b. Compute the following additional ratios for both firms:

Net income/Sales

Net income/Total assets

Sales/Total assets

Debt/Total assets

Easter Egg and Poultry Company has \(2,000,000 in assets and \)1,400,000 of debt. It reports net income of $200,000.

b. What is its return on stockholders鈥� equity?

Baker Oats had an asset turnover of 1.6 times per year.

a. If the return on total assets (investment) was 11.2 percent, what was Baker鈥檚profit margin?

The balance sheet for Stud Clothiers is shown below. Sales for the year were \(2,400,000, with 90 percent of sales sold on credit.

Stud Clothier

Balance sheet 20X1

Assets

Liabilities and Equity

Cash

\)60,000

Account payable

\(220,000

Account receivable

240,000

Accrued taxes

30,000

Inventory

350,000

Bonds payable (long term)

150,000

Plant and equipment

410,000

Common stock

80,000

Paid in capital

200,000

Retained earnings

380,000

Total assets

\)1,060,000

Total LIbilities and Equity

$1,060,000

Compute the following:

b. Quick ratio.
See all solutions

Recommended explanations on Business Studies Textbooks

Finance Literacy (Business Studies)

Read Explanation

Family Business

Read Explanation

Actuarial Science in Business

Read Explanation

Human 91影视

Read Explanation

Public Relations Business Studies

Read Explanation

Strategy

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.