Considering the addition of a new line of organic fertilizer

Assignment Help Financial Management

Reference no: EM13942223

Martin Inc. is considering the addition of a new line of organic fertilizer. It is expected that each application of fertilizer will sell for $15.50 and the variable operating cost per application will be $8.00. Total fixed operating costs are expected to be $40,000. The company has a 30% marginal tax rate, and will have interest expense associated with this line of $12,000. Martin expects to sell 10,000 applications in the first year. a. Put together the complete income statement for the organic fertilizer line’s first year. Is the line expected to be profitable? b. Calculate the operating break-even point in both units and dollars. c. How many applications would Martin need to sell to earn a target EBIT of $40,000? d. What is the DOL, DFL & DCL for this year? e. If sales are expected to increase by 10% next year, show the preformed Income Statement.

Reference no: EM13942223

Questions Cloud

The market interest rates : Brook Company issued a $10,000, 5-year, 11% bond that was sold when the market interest rates were 12%. The bond pays interest semiannually

Critically analyse the internal and external environment for : Critically analyse the internal and external environment for your chosen organisation, making reference to appropriate literature sources. Using appropriate concepts and models of strategic Human ResourceManagement critically evaluate a variety of hu..

Gui that accepts user input of the amount of the mortgage : Please help write a java program using a graphical user interface that accepts user input of the amount of the mortgage, the term of the mortgage and the interest rate of the mortgage and display the payment.

Compute the payback statistic for project : Compute the Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 10 percent and the maximum allowable payback is 5 years.

Considering the addition of a new line of organic fertilizer : Martin Inc. is considering the addition of a new line of organic fertilizer. It is expected that each application of fertilizer will sell for $15.50 and the variable operating cost per application will be $8.00. Total fixed operating costs are expect..

Draft an e-mail reply sympathizing with the customer pligh : Draft an e-mail reply sympathizing with the customer's plight but preparing him for the bad news (that company policy specifically prohibits refunds in such cases).

Balance sheet equation format : balance sheet equation format to show the effect of the following transactions. Write the account names that will be used for each transaction.

Null and alternative hypotheses for the test : A country report claims that the mean monthly expenses for a family of 4 is US$2,500 per month. You believe that the mean cost is more than US$2,500 per month. You randomly selected a sample of 300 families of 4 and found out the mean cost is US$2..

Determine the temperature of the towel : Determine the temperature Ts of the towel. What is the corresponding evaporation rate for a towel that is 0.75 wide by 1.50 m long

User Account

All Pages