Suppose that Chipotle’s stock paid a dividend of $1.30 last year and that the dividend is expected to remain constant in the future. Chipotle’s beta is 0.55, the current risk-free rate is 2% and the market risk premium is 5%.
What is the intrinsic value (current price) of Chipotle’s stock?
A company produces a single product. Variable production costs are $13.10 per unit and variable selling and administrative expenses are $4.10 per unit. Fixed manufacturing overhead totals $47,000 and fixed selling and administration expenses total $51,000. Assuming a beginning inventory of zero, production of 5,100 units and sales of 4,150 units, the dollar value of the ending inventory under variable costing would be:
A. $8,550
B. $16,340
C. $12,445
D. $20,995
If a division manager’s compensation is based upon the division’s net income, the manager may decide to meet the net income targets by increasing production when using,
a. variable costing, in order to increase net income.
b. variable costing, in order to decrease net income.
c. absorption costing, in order to increase net income.
d. absorption costing, in order to decrease net income.
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