1. The marketing manager of Eastern Digital estimates that the company can sell a portable hard drive for $60 per unit for 25,000 units during the upcoming year. This estimate is based on the historical demand for portable hard drives. During the new year, the price of the portable hard drive came under extreme pressure as a new supplier in Europe flooded the market with a lower-priced portable hard drive. In response to high competition, Eastern Digital dropped its price to $48 and sold 30,000 units during that period. What is the sales price variance during the year?
A. $360,000 Favorable sales price variance
B. $300,000 Favorable sales price variance
C. $300,000 Unfavorable sales price variance
D. $360,000 Unfavorable sales price variance
2. You are given the equation X= 4,000 +100Y +5W^2 and M= 1,000 +50W. Your company has been allotted debt at 30%. Your goal is an ROR of 15% and the debt to be equal to 8% with a tax of 20%. With W=20 and a price of 390 what is the 1. Return on equity? 2. Economic profit? 3. Theta (profitability)?