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A subsidiary of a major furniture company manufactures wooden pallets. The plant has the capacity to produce 300,000 pallets per year. Presently, the plant is operating at 70 percent of capacity. The pallets’ selling price is $18.25 per pallet, and the variable cost per pallet is$15.75. At zero output, the subsidiary plant’s annual fixed costs are $550,000. This amount remains constant for any production rate between zero and plant capacity.
a. With the present 70 percent of capacity production, what is the expected annual profit or loss for the subsidiary plant?
b. What annual volume of sales (units) is required in order for the plant to break even?
c. What would be the annual profit or loss if the plant is operating at 90 percent of capacity?
d. If fixed costs could be reduced by 40 percent, what would be the new breakeven sales volume?
The following selected transactions were completed by Capers Company during October of the current year: Oct. 1. Purchased merchandise from UK Imports Co., $14,448, terms FOB destination,n/30. 3. Purchased merchandise from Hoagie Co.,$9,950, terms FOB shipping point, 2/10, n/eom. Prepaid freight of $220 was added to the invoice. 4. Purchased merchandise from Taco Co.,$13,650, terms FOB destination, 2/10, n/30. 6. Issued debit memo to Taco Co. for $4,550 of merchandise returned from purchase on October 4. 13. Paid Hoagie Co. for invoice of October 3, less discount. 14. Paid Taco Co. for invoice of October 4, less debit memo of October 6 and discount. 19. Purchased merchandise from Veggie Co.,$27,300, terms FOB shipping point, n/eom. 19. Paid freight of $400 on October 19 purchase from Veggie Co. 20. Purchased merchandise from Caesar Salad Co.,$22,000, terms FOB destination, 1/10, n/30. 30. Paid Caesar Salad Co. for invoice of October 20, less discount. 31. Paid UK Imports Co. for invoice of October 1. 31. Paid Veggie Co. for invoice of October 19. Instructions Journalize the entries to record the transactions of Capers Company for October.
Use Apple’s financial statements in Appendix A to answer the following.
Identify Apple’s long-term debt as reported on its balance sheet at (a) September 30, 2017, and (b) September 24, 2016.
Calculate the percentage change in long-term debt from September 24, 2016, to September 30, 2017.
If Apple’s reported long-term debt continues on the current trend, do we expect total interest expense to increase or decrease?