Impact on profits if costa were to accept special order

Assignment Help Financial Management
Reference no: EM131618977

Costa Company has a capacity of 40,000 units per year and is currently selling 35,000 for $400 each. Barton Company has approached Costa about buying 2,000 units for only $300 each. The units would be packaged in bulk, saving Costa $20 per unit when compared to the normal packaging cost. Normally, Costa has a variable cost of $280 per unit. The annual fixed cost of $2,000,000 would be unaffected by the special order. What would be the impact on profits if Costa were to accept this special order? options: A. Profits would increase $40,000. B. Profits would increase $60,000. C. Profits would decrease $200,000. D. Profits would increase $80,000

Reference no: EM131618977

Questions Cloud

What can the teach us about the importance of sabbath : Discussion: Genesis- In at least 350 words what can this teach us about the importance of Sabbath and about "God's rest?"
Standard deviation of the expected return : Explain the answers and show supporting calculations. Stock X has an expected return of 8% and the standard deviation of the expected return is 9%.
Examine the darryl hunt case : Examine the Darryl Hunt case from 1984 and the impact of his release.Are crimes still tied together today? Explain.
What are the possible legal effects of the firm actions : Subsequently Discovered Facts. On June 1, Sidney Faultless of A. J. Faultless & Co., CPAs, noticed some disturbing information about the firm's client.
Impact on profits if costa were to accept special order : What would be the impact on profits if Costa were to accept this special order?
Specific measures that have been employed to address problem : Specific measures that have been employed to address the problems. A discussion of how effective these measures have been.
The regulating of the private police departments : Public versus private policing, what are some of the issues that may arise in regards to the regulating of the private police departments?
Explain the omitted audit procedures : The following are independent situations that have occurred in your public accounting firm, Arthur Hurdman11.
What price should be charged if units are expected to sold : If the company markes up total cost by 0.44, what price should be charged if 64,000 units are expected to be sold?

Reviews

Write a Review

Financial Management Questions & Answers

  The cost incurred is directly related to production

Expenses can be categorized by whether the cost incurred is directly related to production or not. Which of the following is correct? If directly related, it will not change with the production level, thus called Fixed Cost. If directly related, it w..

  How much of this judgment would the insurance cover

Becky Fenton has 70/140/80 automobile insurance coverage. If two other people are awarded $115,000 each for injuries in an auto accident in which Becky was judged at fault, how much of this judgment would the insurance cover?

  What is the inventory value at the end of the year

The Konkuk University Hospital uses pharmaceuticals for their patients. What is the inventory value at the end of the year, assuming FIFO?

  Calculate the best-case and worst-case npv figures

Calculate the best-case and worst-case NPV figures.

  Expects the market to be lower in the future

An investor who is “bearish” (i.e., expects “the market” to be lower in the future) can Sell individual stocks short; buy a put option, or; can write a call option. These three choices: Are quite different. Since shorting stocks or call options will ..

  What is the fair value of preferred stock for that investor

Pioneer's preferred stock is currently selling for $33.00 in the market and pays a $3.60/share annual dividend (or $0.90/share quarterly dividend). A. If an investor's required rate of return on Pioneer's preferred stock is 10% p.a., what is the fair..

  Construct incremental analysis

Suppose you need to decide whether to keep a machine or replace it with a new one: Old machine: Old machine can operate for 5 years with operating cost of $120,000 per year. Construct incremental analysis and conclude which alternative is more econom..

  What is the subscription price

Keira Mfg. is considering a rights offer. The company has determined that the ex-rights price would be $63. The current price is $75 per share, and there are 25 million shares outstanding. The rights offer would raise a total of $50 million. What is ..

  What will the value of firm be if company takes on debt

What is the current value of the company? What will the value of the firm be if the company takes on debt equal to 40 percent of its levered value?

  Net present value is sum of all present-future cash flows

Weir Inc. is considering a project that contributes $12,000 at the end of the first year and $7,000 at the end of the second year? The initial cost of the project is $12,000 (negative cash flow!). What is the net present value of the project at a 10%..

  Does this company have access to external capital

What is southwest airlines ability to borrow funds or raise equity. Does this company have access to external capital? "Access to target sources of external finance for Southwest Airlines?"

  Debt–equity ratio-Calculate the APV of the project

MVP, Inc., has produced rodeo supplies for over 20 years. The company currently has a debt–equity ratio of 50 percent and is in the 40 percent tax bracket. The required return on the firm’s levered equity is 14 percent.  The company would also make y..

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