Answer to Question #309654 in Management for Ethan molla

Question

1. Suppose Mary intends to sell two software products X & Y for the next convention & budgets the following. X Y Total Units Sold. 60 40 100 Revenues, $200 $100 per unit $12,000 $ 4,000 $16,000 Variable Costs, $120 $70 per unit 7,200 2,800 10,000 Unit Contribution Margin, $80 $ 30 per unit $ 4,800 $ 1200 $ 6,000 Fixed Costs 4,500 Operating Income $ 1,500 Required: What is the BEP (in units & in Birr Required: Answer the following 1. What is the sales mix of videos and equipment sets 2. Compute weighted average contribution margin 3. Compute the break-even quantity of each product. 4. What is weighted average contribution margin ratio 5. What is the overall break-even sales revenue

Answer 1

Your initial investment is the sum of $5,000 in equity and $5,000 from borrowing, which enables you to buy 200 shares of Telecom stock: nitial investment Stock price = $ , $ = 200 shares The shares increase in value by 10%: $10,000  0.10 = $1,000. You pay interest of = $5,000  0.08 = $400. The rate of return will be: $ － $ $ , = 0.12 = 12% 

The value of the 200 shares is 200P. Equity is (200P – $5,000), and the required margin is 30%. Solving － = 0.30, we get P = $35.71. You will receive a margin call when the stock price falls below $35.71.