Suppose That Team Industries, Inc A) $2,140,000
B) $2,320,000
C) $2,500,000
D) $4,500,000

question 49

Multiple Choice

Suppose that Team Industries, Inc. currently has the balance sheet shown as follows, and that sales for the year just ended were $3 million. The firm also has a profit margin of 20 percent, a retention ratio of 30 percent, and expects sales of $6 million next year. If all assets and current liabilities are expected to increase with sales, what amount of additional funds will the company need from external sources?
$$\begin{array} { l r l l l } \text { Assets } & & { \text { Liabilities and Equity } } \\\text { Current Assets } & \$ 2,000,000 & \text { Current Liabilities } & \$ 2,000,000 \\\text { Fixed Assets } & 2,500,000 & \text { Long-tern Debt } & 1,500,000 \\& & \text { Equity } & 1,000,000 \\\text { Total Assets } & \$ 4,500,000 & \text { Total Liabilities ard Equity } & \$ 4,500,000\end{array}$$

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Definitions:

Marginal Cost

The monetary cost of manufacturing one more unit of a good or service.

Average Total Cost

The total cost of production divided by the number of goods produced, representing the cost per unit of output.

Product Variety

The range of different products or services offered by a company or available in a market, catering to diverse customer tastes and needs.

Allocative Efficiency

A state of the economy in which production represents consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it.