The valasquez company a maker of a variety of metal and

Reference no: EM13570812

The Valasquez Company, a maker of a variety of metal and plastic products, is in the midst of a business downturn and is saddled with many idle facilities. Columbia Health Crae has appraoached Velasquez to produce 300,000 nonslide serving trays. columbil will pay $1.30 each. Valasquez predicts that its variable costs will be $1.40 each. Its fixed costs , which had been averaging $1 per unit on a variety of other products, wil now be spread over twice as much volume, however. The president commented, "Sure we'll lose $.10 each on the variable costs, but we'll gain $.50 per unit by spreading our fixed costs. Therefore, we should take the offer, because it represents an advantage of $.40 per unit." Suppose the regular business had a current volume of 300,000 units, sales of $600,000, variable costs of $420,000 and fixed costs of $300,000. Do you agree with the president and Why?

Reference no: EM13570812

Questions Cloud

A project for jevon and aaron inc results in additional : a project for jevon and aaron inc. results in additional accounts receivable of 200000 additional inventory of 120000

If fixed costs are 40500 per period variable costs are : if fixed costs are 40500 per period variable costs are 12.50 per unit are revenue is 20.00 per unit how many units must

Explain and analyze the following philosophical theories : section i explain the following terms no less than 75 words for each question1. epistemology2. axiology3.

You have just won the lottery and will receive 1000000 in : you have just won the lottery and will receive 1000000 in one year. you will receive payments for 30 years and the

The valasquez company a maker of a variety of metal and : the valasquez company a maker of a variety of metal and plastic products is in the midst of a business downturn and is

What is the cost of internal common equity if the long-term : the expected dividend is 1.50 for a share of common stock priced at 15. what is the cost of internal common equity if

To finance the purchase youve arranged for a 30-year : you have just purchased a new warehouse. to finance the purchase youve arranged for a 30-year mortgage loan for 80

Company is open 7 days a week and has a daily payroll of : 1.company is open 7 days a week and has a daily payroll of 1750. employees are paid every friday december 31 is a

You have just won a lottery you will receive 50000 a year : you have just won a lottery you will receive 50000 a year beginning one year from now for 20 years. if your required

User Account

All Pages