1. As part of your competitive analysis, you notice that at Baldwin Corporation the Promo and Sales budgets of the Best product are pretty low. You wonder how doubling Best’s Sales and Promo budget next year will increase demand–and aversely affect your sales. Examine the profitability of this scenario to Baldwin. For simplicity, assume the following:As part of your competitive analysis, you notice that at Baldwin Corporation the Promo and Sales budgets of the Best product are pretty low. You wonder how doubling Best’s Sales and Promo budget next year will increase demand–and aversely affect your sales. Examine the profitability of this scenario to Baldwin. For simplicity, assume the following:

• Price remains unchanged at \$19.00.
• Variable costs reported on the Production Analysis Report remain constant: material stays at \$6.93/unit and labor at \$2.81/unit.
• Promo and Sales budgets double from \$1,000,000 and \$1,000,000 respectively.
• No inventory carry costs.
• All other period costs are the same as reported on last year’s Annual Report.
Estimate how many units of Best would have to be sold to reach break even.

446 thousand units
698 thousand units
914 thousand units
340 thousand units

2.The product manager for Baldwin’s Elite product, Bit, is comparing his product to Chester’s Elite product, City, in terms of reliability costs between the two. If it costs \$0.30 per 1000 hours of MTBF, what is the difference in reliability cost per unit?

\$1.50

\$1.82

\$2.00

\$1.25

3.The Andrews Company has just issued \$21,245,030 in dividends last year. The effect of this payment on the balance sheet is:

Equity will decrease \$21,245,030

Expenses will increase \$21,245,030

Net Profit will decrease \$21,245,030

Liabilities will increase \$21,245,030

4.What is the Profit Margin of Chester?

6.68

.08

12.82

.15

5.Chester has a ROE of 0.22 (ROE = Net income/equity). That means:

Chester earns \$0.22 for each dollar invested by shareholders.

Chester earns \$0.78 per share for common stock held by shareholders.

Chester earns \$0.22 per share for common stock held by shareholders.

Chester earns \$0.78 for each dollar invested by shareholders.

6.Which mission statement best represents the Digby company?

Innovation meets revolution. We create value for our customers through breakthrough designs that lead to unique high-performance products.

Consistency and affordability are our goals. Our central mission is to offer dependable, low-price products that our customers can count on.

Providing value to our customers is why we get up in the morning. We accomplish this by offering products at a low price our customers can afford across a wide variety of market segments.

Lasting innovation is our motivation. We build premium products that are elegantly designed to meet the needs of a variety of market segments.

7.Your company acquires inventory on account. Select the impact on your financial statements.

Increasing assets only.

Increasing assets and liabilities.

Increasing liabilities only.

Increasing liabilities and decreasing asset

8. A business is concerned with many day-to-day activities. Some of the most important are the planning and conception of the product or service, its pricing policy, and the distribution strategy. These activities are all a part of:

Accounting.

Human Resources.

Marketing.

A control system.

Production.

9.Baldwin has a productivity index of 121.1%. What does this mean?

The Workforce Complement increased by 17.4% last year.

17.4% of the company’s workforce is working overtime.

The company needs 17.4% less people to do the same amount of work.

The company needs 17.4% more people to do the same amount of work.

10.Midyear on July 31st, the Digby Corporation’s balance sheet reported:

Total Assets of \$207.448 million
Total Common Stock of \$6.350 million
Cash of \$10.050 million
Retained Earnings of \$44.713 million.

10. What were the Digby Corporation’s total liabilities?

\$162.735 million.

\$166.435 million.

\$156.385 million.

\$146.335 million.

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