Fixed costs and maximizing firm value

Assignment Help Accounting Basics
Reference no: EM1363817

Golf Specialities (GS) is a Belgian company which manufacture head covers.

GS is currently making 500 tiger head covers at 3.50 euros, which includes both variables and allocated fixed cost. GS sell to distributors for 4.25 euros. A distributor from Japan (Kojo) wants to purchase 100 tiger head covers per week from GS and sell them in Japan. Kojo offers 2 euros per head cover. GS had enough capacity to produced the additional covers and estimate that if accepts Kojo offer the per unit cost of all 600 head cover will be 3.10. Assume the cost data provided (3.50 euros and 3.10 euros) are accurate estimates of GS's cost of producing the tiger head covers?

1. To maximize the firm value, should GS accept the Kojo offer? Why or why not?

2. Given the data, what is GS weekly fixed cost of producing the tiger head covers?

3. Besides the data provided above, what other factor should GS consider before making the decision.

Reference no: EM1363817

Questions Cloud

What is the magnitude and direction of the force : what is the magnitude and direction of the force. explain the magnitude and direction of the force she exerts on you?
Illustrate what is the profit-maximizing price and quantity : Hair Grow Co. has a demand curve of P=101-.00002Q Marginal cost for producing Hair Grow pill is $1. Illustrate what is the profit-maximizing price and quantity. What is the profit.
Importance of power in a relationship between married couple : What are some factors that lead to short-term attraction and long-term attraction in a relationship and what is the importance of power in a relationship between married couples?
Market value ratio of debt to debt : There was an upward trend in the ratio of the book value of debt to book value of debt and equity throughout the 1990s. Some of this was due to the rebuying of stock.
Fixed costs and maximizing firm value : To maximize the firm value, should GS accept the Kojo offer? Why or why not? Given the data, what is GS weekly fixed cost of producing the tiger head covers? Besides the data provided above, what other factor should GS consider before making the deci..
Write parameterized function to play the game : Your program cannot use file level variables or constants; your program cannot use global variables or constants. The functions that you write exchange data by means of return statements and value parameters and reference parameters
Explain formal presentations are always much longer : Explain formal presentations are always much longer and formal presentations are often delivered from a stage or platform.
Calculate the force and the total work required in each case : compute the force and the total work required in each case. Find the tension in each of the cables.
Managing cross-functional teams : Managing Cross-Functional Teams - What do you need to do to manage cross-functional teams? How can a manager maintain order in such a diverse group?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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