The data above shows the net working capital requirements for Flinder's Camping, a company that makes tents. All figures are in thousands of dollars. What are Flinder's temporary working capital needs in the quarter in which they are greatest?
Minimum Cash Balance $300 $300 $300 $300
Accounts Receivable 80 640 360 100
Inventory 1060 420 60 440
Accounts Payable (330) (330) (330) (330)
A) $390,000
B) $510,000
C) $720,000
D) $1,111,000
Answer: C
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Studies of mutual fund performance indicate that mutual funds that outperformed the market in one time period
A) usually beat the market in the next time period. B) usually beat the market in the next two subsequent time periods. C) usually beat the market in the next three subsequent time periods. D) usually do not beat the market in the next time period.
Choosing between compensation plans, operating leverage
(CMA, adapted) BioPharm Corporation manufactures pharmaceutical products that are sold through a network of external sales agents. The agents are paid a commission of 20% of revenues. BioPharm is considering replacing the sales agents with its own salespeople, who would be paid a commission of 13% of revenues and total salaries of $2,240,000. The income statement for the year ending December 31, 2013, under the two scenarios is shown here. Required: 1. Calculate BioPharm's 2013 contribution margin percentage, breakeven revenues, and degree of operating leverage under the two scenarios. 2. Describe the advantages and disadvantages of each type of sales alternative. 3. In 2014, BioPharm uses its own salespeople, who demand a 16% commission. If all other cost-behavior patterns are unchanged, how much revenue must the salespeople generate in order to earn the same operating income as in 2013?