Compare and contrast profitability of two solar panel firms

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Reference no: EM132114513

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1. Carrie earned $80,000 working as a salesperson for the Now You Know advertising firm. She decided to quit this job and venture out on her own as an agent for aspiring actors and actresses. Her first year in business she did not draw a salary. The business revenues were $240,000 and total expenses were $130,000.

How much was Carrie’s accounting profit?

How much was Carrie’s entrepreneurial profit?

2. Ken sells solar panel systems in California. His annual sales are $400,000, and net income is $30,000. He has $100,000 worth of assets invested in this business. His friend Lamar sells solar panel systems in Florida. Lamar’s annual sales are $500,000 and he earns net income of $50,000. Lamar has assets worth $250,000 invested in his business.

What is Ken’s net profit margin? What is Lamar’s net profit margin?

What is the asset turnover for Ken’s company? What is Lamar’s asset turnover?

Compare and contrast the profitability of the two solar panel firms.

3. The Steel Shelf Company has the following operating costs:

Rent $3,000 per month

Utilities 1,100 per month

Insurance 1,500 per quarter

Property Taxes 6,000 per year

Steel $9.00 per shelf

Labor $1.00 per shelf

Sales Price $20.00 per shelf

What is the company’s variable cost per unit?

How many units per month does Steel Shelf Company need to sell to break even?

What is Steel’s contribution margin as a percentage of each dollar of sales?

If the company wants to earn a profit of $4,000 in a month, how many units do they need to sell?

If the price of steel increases by $1 for each shelf, insurance costs rise to $1,800 per quarter, and increased competition forces them to lower the sales price to $18.00 per shelf, how many units per month will Steel now need to sell to break even?

Reference no: EM132114513

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