Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy is strong, the tax of firm C will be
A. -$420,000.
B. $750,000.
C. $510,000.
D. $204,000.
A. -$420,000.
$1,050,000(.4) = $420,000 (see response to question 82).
You might also like to view...
Which of the following guidelines will help a virtual leader gain the advantages of virtual creativity?
a. Limit the influence of one idea on another b. Ensure members are easily identified. c. Choose members who share the same values. d. Meet face-to-face.
Which of the following is NOT a technique for achieving coherence?
a. Repeat a word used in a preceding sentence. b. Use a pronoun to represent a noun from the preceding sentence. c. Use connecting words. d. Use active voice.
A company's fixed interest expense is $25,000, its income before interest expense and income taxes is $206,250. Its net income is $96,950. The company's times interest earned ratio equals:
A. 0.121. B. 0.26. C. 0.47. D. 8.25. E. 2.13.
Competition is toughest in which of the following product life cycle stages?
A. market maturity B. market introduction C. market hold D. market growth E. market development