Selling price $ 110,000 $ 110 100 % variable expenses 60,000 60 55 % contribution margin 50,000 $ 50 45 % fixed expenses 30,000 net operating income $ 20,000 knowledge check 01 assume the company is considering a reduction in the selling price by $10 per unit and an increase in advertising budget by $5,000. this will increase sales volume by 50%. what is the net operating income after the changes?

You are chairman of the board of a successful technology firm. there is a nominal federal corporate tax rate of 35 percent, yet the effective tax rate of the typical corporation is about 12.6%. your firm has been clever with use of transfer pricing and keeping money abroad and has barely paid any taxes over the last 5 years; during this same time period, profits were $28 billion. one member of the board feels that it is un-american to use various accounting strategies in order to avoid paying taxes. others feel that these are legal loopholes and corporations have a fiduciary responsibility to minimize taxes. one board member quoted what the ceo of exxon once said: “i’m not a u. s. company and i don’t make decisions based on what’s good for the u. s.” what are the alternatives? what are your recommendations? why do you recommend this course of action?

True or false entrepreneurs try to meet the needs of the marketplace by supplying a service or product

Banana computers has decided to procure processing chips required for its laptops from external suppliers instead of manufacturing them in their own facilities. how will this decision affect the firm? a. the firm will be protected against the principal-agent problem. b. the firm's administrative costs will be low because of necessary bureaucracy. c. the firm will have more flexibility in purchasing and comparing prices of goods and services. d. the firm will have high-powered incentives, such as hourly wages and salaries.