Zozan Corp. manufactures Hydrogen engines automobiles. The variable cost is $41,000 per unit, and the credit price is $44,000 each. Credit is extendedfor one period, and based on historical experience, payments for 11% of the orders are never collected. The required return is 3% per period.Assuming a repeat customer, should it be filled by the firm? The customer will not buy if credit is not extended (Do not use the $ sign. if your answer is-$123,456.78, then enter -123456.78).

To determine whether the firm should fill the order for a repeat customer, we need to analyze the…

Answered: Zozan Corp. manufactures Hydrogen…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Assume that you are in charge of pricing for a firm thatproduces pickles. You have fixed costs of $2,000,000.Variable costs are $0.75 per jar of pickles. You are selling your product to retailers for $0.89. You sell thepickles in cases of 24 jars per case.a. How many jars of pickles must you sell to breakeven?b. How much must you sell in dollars to break even?c. How many jars of pickles must you sell to breakeven plus make a profit of $300,000?d. Assume a retailer buys your product for S0.89.His business requires that he prices products witha 35 percent markup on cost. Calculate his sellingprice.e. Assume you have an MSRP of $1.39 for the pickles.If a retailer has a required 35 percent retailer margin on all products he sells, what is the most he iswilling to pay the producer for the pickles?f. A clothing retailer knows that to break even andmake a profit he needs to have a minimum retailermargin (also referred to as a contribution margin orgross margin) of at least 60 percent. If he…
The Art Gallery is notoriously known as a slow-payer. The firm currently needs to borrow $25,000 and only one company will loan to them. The terms of the loan call for weekly payments of $500 at a weekly interest rate of .45%. What is the loan term? A 42.5 weeks B 43.33 weeks C 45.00 weeks D 50.11 weeks E 56.77 weeks
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SASA Trading involves in making bottled sauce called kicap. Currently, the company operating below its full capacity. The photos is the financial report for the year of 2021. Additional information: There’s one direct seller offered to purchase 7,000 bottles of kicap at $0.9 per bottle. Due to below selling price and its production cost per unit, the company is unwilling to accept the order. Requirements: a) Determine whether SASA Trading should accept or reject the order. Show the computations. b) Before making decision, discuss the relevant qualitative factors that need to be considered on whether to accept or reject it.
Ascenda Corp. distributes the "Smart" brand of electronic controller systems. The company currently has a credit policy of 1/10, net 40, though an average only 20% of the customers pay in 10 days and take the discount, while another 30% pay on avorage in 15 days yet still take the unearned discount. The company's remaining customers pay on average in 50 days. Bad debt losses are 3% of sales. The company's sales are currently $600,000 per month, all on credit. Ascenda is thinking of restructuring its credit and collections department, with the goal of eliminating all unearned discounts and reducing bad debt losses to 1.5%. With this new policy, the company believes that sales will fall by 5% and 40% of the customers will pay in 10 days and obtain the discount, and that the remaining customers will pay in 40 days. Ascenda's variable costs are 60% of sales, its monthly collections department expense is expected to rise by $6,000 to $20,000, and its opportunity cost on funds is 12%…
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Assume that you are in charge of pricing for a firm that produces pickles. You have fixed costs of $2,000,000. Variable costs are $0.75 per jar of pickles. You are selling your product to retailers for $0.89. You sell the pickles in cases of 24 jars per case. a. How many jars of pickles must you sell to break even? b. How much must you sell in dollars to break even? c. How many jars of pickles must you sell to break even plus make a profit of $300,000? d. Assume a retailer buys your product for $0.89. His business requires that he prices products with a 35 percent markup on cost. Calculate his selling price. e. Assume you have an MSRP of $1.39 for the pickles. If a retailer has a required 35 percent retailer margin on all products he sells, what is the most he is willing to pay the producer for the pickles? f. A clothing retailer knows that to break even and make a profit he needs to have a minimum retailer margin (also referred to as a contribution margin or gross margin) of at least…
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Consider the case of the Cast Iron Company. On each nondelinquent sale, Cast Iron receives reveneues with a present value of $1,260 and incurs costs with a present value of $1,000. Cast Iron's costs have increased from $1,000 to $1,110. Assuming there's no probabililty of repeat ordes and that the probability of successful collection from the customer is p=0.95, A) What is the expected profit of granting credit? (don't round intermediate calculations. Round answer to 2 decimals) B) What is the break-even probability of collection?
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A new customer ABC Ltd, wants to buy 500 units of your product, but is only prepared to pay RM4 per clock. This will not cover the total cost of making the product, but it will cover the variable costs – anything over RM3 makes a Provide and discuss three factors that you would take into account when deciding whether or not to take the order.

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