Reference no: EM133075324
Question - SPI-W Inc. manufactures front fenders that are sold by brokers. The brokers are paid a commission of 18% of sales. The partial statement of earnings for the year ended September 30, 2021 is as follows:
|
SPI-W Inc. Statement of Earnings September 30, 2021
|
|
Sales
|
|
$26,000,000
|
|
Cost of Goods Sold
|
|
|
|
Variable
|
$11,700,000
|
|
|
Fixed
|
2,870,000
|
14,570,000
|
|
Gross Margin
|
|
$11,430,000
|
|
Expenses
|
|
|
|
Commissions
|
4,680,000
|
|
|
Fixed Costs
|
3,420,000
|
8,100,000
|
|
Operating Income
|
|
$3,330,000
|
SPI-W Inc. has had several meetings and the CFO, Billy Know it All, suggests that the company consider hiring its own staff to replace the brokers. The company will pay its own staff a commission of 10% and incur fixed costs of $2,080,000.
Required -
1. Calculate SPI-W Inc.'s breakeven point in sales dollars for the year 2021, as it is currently with the brokers.
2. Calculate SPI-W Inc.'s breakeven point in sales dollars for the year 2021, if the company had its own sales people.
3. Using operating leverage at the current sales, consider i) current brokers. ii) own staff. Describe the advantage and disadvantages of each scenario.
4. If SPI-W Inc. considers increasing the commission for their own proposed staff to 15%, keeping all other costs the same, how much revenue (in dollars) would SPI-W Inc. need to generate to earn the same operating income it did in 2020?
|
What after - tax rate of return must shawhan supply earn
: Assuming a 40% marginal tax rate, what after - tax rate of return must Shawhan Supply earn on its investments if the value of the firm is to remain unchanged
|
|
Explain what a shariah compliant stock is
: 1. Explain what a Shariah compliant stock is.
|
|
What total amount should be reported as current liabilities
: Income tax payable- P900,000· Note payable due January 31, 2022- P600,000. On December 31, 2021, what total amount should be reported as current liabilities
|
|
Determining the market reaction
: Market reaction: What does the stock market seem to say about the acquisition of PacifiCorp by Berkshire Hathaway?
|
|
Calculate spi-w inc breakeven point in sales dollars
: Calculate SPI-W Inc.'s breakeven point in sales dollars for the year 2021, if the company had its own sales people
|
|
How does npv affect a project
: How does NPV affect a project? What other factors should we consider when selecting a project?
|
|
What will you pay for a share today
: Macon Co. is a manufacturing firm. The company just paid a $2.4 dividend, but management expects to reduce the payout by 10% per year indefinitely.
|
|
Spot rate prevailing in one year
: A trader can borrow $1,000,000 US dollars. Suppose the one-year borrowing rate in US dollars is 4%, the one-year lending rate in Euros is 6%, and the spot excha
|
|
Calculate the one-year forward premium
: a).Calculate the one-year forward premium or discount on the Australian dollar. Show your calculations.
|