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

  Computing loss of impairment

Donald Corporation owns machinery with a book value of $670,000. It is estimated that the machinery will generate future cash flows of $560,000.

  Strategy for gm

Write a strategy on how GM should operate its financial aspect of the company to improve sales.

  Business processes and control

Of all the business processes in the Accounting Information Systems (AIS), which do you think is the hardest to control and why? Be specific in your discussion of internal controls.

  Goodwill impairment in consolidating journal entries

Prepare the related consolidated journal entries if 30% of the goodwill is to be written off as impairment loss?

  Calculating total inventory destroyed in fire

A fire completely destroyed the entire inventory of Printing Delight Company on April 10, 2014. Fortunately, the books were not destroyed in the fire. The following information is taken from the books of Printing Delight Company for January 1 to A..

  Provide and explain missing closing entry

Retained earnings at 1/1/06 was $150,000 and at 12/31/06 it was $200,000. During 2006, cash dividends of $50,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings.

  Phases of the retirement plan

Kim is measuring her retirement plan. Assume she has $500,000 when she retires in an account that earns at an effective annual rate of 9%.

  Fraud and production cycles

What are several conditions that can lead to fraud and to what type of fraud can they lead? Describe the source documents and controls that would be included in a typical production cycle.

  Relational database model

Identify the different entities and their associated attributes that would be found in your potential relational database model for your sales database, pertaining to the hotel industry.

  Elements for action which is based on strict liability

Eagle Tools, Inc., the manufacturer of the gun, for product liability, on the ground of strict liability. What are the elements for an action based on strict liability? In whose favor is the court likely to rule?

  Journal entries-internal service fund to record transactions

William County opted to account for its duplication service center in the internal service fund. Previously the center had been accounted for in county's general fund. During first month in which it was accounted for as an internal service fund cent..

  Adjusting journal entries-trading securities

Prepare the adjusting journal entry needed on December 31, 2006. Prepare the journal entry to record the sale of the Colorado Company stock during 2007.

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