The Wholesale Price for Captain John S Is $1

The wholesale price for Captain John’s is $1.00 per loaf, and the variable cost of production is $0.50 per loaf. Captain John’s is expecting that expansion will allow them to sell an additional 5.0 million loaves in the next year. What additional revenues minus expenses will be generated from expansion? A. $25,000 B. $250,000 C. $550,000 D. none of these

Contribution margin = wholesale price − variable cost = $1.00 − $0.50 = $0.50 per loaf. The additional 5 million loaves would therefore generate an increase of $0.50 per loaf times 5 million loaves = $2,500,000 in revenues minus expenses each year

52) In efficient markets, as in the United States, you should think long and hard before you conclude that a market price is ______. A. wrong. B. fair. C. followed by many analysts. D. all of these

53) Which of the following statements is true? A. Soft capital rationing refers to the rationing imposed externally by limited funds for borrowing from outside sources. B. Hard capital rationing refers to the rationing imposed internally by the firm. C. A post audit is a set of procedures for evaluating a capital budgeting decision after the fact. D. all of these

54) Due to asymmetric information, the market fears that a firm issuing securities will do so when the stock is ______. A. undervalued. B. overvalued. C. caught up in a bear market. D. being sold by insiders.

55) ______says to forecast the firm’s cash flows, and analyze the incremental cash flows of alternative decisions. A. The Signaling Principle B. The Principle of Incremental Benefits C. The Principle of Risk-Return Trade-Off D. The Time Value of Money Principle

56) ______says to use common industry practices as a good starting place for the planning process. A. The Principle of Incremental Benefits B. The Principle of Self-Interested Behavior C. The Principle of Valuable Ideas D. The Behavioral Principle

57) ______says to carefully evaluate and monitor the financial plan’s impact on the firm and its stakeholders. A. The Principle of Risk-Return Trade-Off B. The Principle of Capital Market Efficiency C. The Principle of Self-Interested Behavior D. The Principle of Diversification