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1300%20Midterm%20Solutions(1)

# 1300%20Midterm%20Solutions(1) - SECTION II PROBLEMS(15...

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SECTION II. PROBLEMS (15 marks) 1. a) How many nightshirts does Mr. Sleepmaster’s company need to sell in order to at least cover his costs? (5 marks) VC = 2.45 + 1.25 + 1.00 = 4.70 FC = (1250*12) + (2250*12) + (1100*12) + 10,000 = 15,000 + 27,000 + 13,200 + 10,000 = 65,200 SP = 20.00 20.00 – 4.70 = 15.30 65,000/15.30 = 4261.44 He must sell 4261.44 shirts. 1. b) To realize a profit of \$525,000 (before tax), how many shirts must the company sell? (5 marks) SP – VC 20 – 4.70 = 15.30 Profit 525,000/15.30 = 34,313.73 34,313.73 + 4261.44 = 38575.17 Must sell 38,575.17 shirts. 1. c) Given the answer to above, what would the fixed costs be to generate the profits of \$525,000? (5 marks) Fixed costs are fixed. They always stay the same. \$65,200 SECTION III. ESSAY QUESTIONS. (55 marks) 1. a) 77,000 more jobs b) 5.9% c) 6.2%

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2. The Mixed Member Proportional Referendum It dealt with how Ontario’s citizens would vote in the future (once for a local member and once for a political party). The referendum was defeated by 66%. 3. The Bank of Canada left its key interest rate unchanged at 4.5%. 4. There are 3 principle forms of ownership. Sole Proprietorship : when ownership and management of a business are one and the same. It is the oldest form of business; represents about 65% of all the businesses in Canada. Advantages: -personal satisfaction; incentive -easy to set up; easy to dissolve -no bureaucracy or red tape (simplicity) -Gov’t preferential treatment -taxed on a personal level only -sole claim on all profits -secrecy Disadvantages -unlimited liability -lack of continuity; limited existence (uncertainty of duration)
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