Headlines Publishing Company (HPC) Specializes in International Business News Publications

question 52

Essay

Headlines Publishing Company (HPC) specializes in international business news publications. Its principal product is HPC-Monthly, which is mailed to subscribers the first week of each month. A weekly version, called HPC-Weekly, is also available to subscribers over the Web at a higher cost. Sixty percent of HPC's subscribers are nondomestic customers. The company experienced a fast growth in subscribers in its first few years of operation, but sales have begun to slow in recent years as new competitors have entered the market. HPC has the following cost structure and sales revenue for its subscription operations on a yearly basis. All costs and all subscription fees are in U.S. dollars. Required: Use these data to determine the following:
1. Contribution margin per unit for weekly and monthly subscriptions.
2. Contribution margin ratio for weekly and monthly subscriptions.
3. HPC's breakeven point in annual sales units and sales dollars (round answers up, to nearest whole number).
4. HPC's required sales to reach a target before-tax profit of $75,000 for the year. What is the breakdown of this overall level of subscriptions into Weekly and Monthly subscriptions?
5. What are the critical success factors for HPC? For its domestic subscribers? For its international subscribers? How can CVP analysis be used to make HPC more competitive?

Comprehend the circumstances under which nondisclosure can lead to the invalidation of a contract.

Recognize the role of unilateral mistake in contract law and its potential to invalidate agreements.

Understand legal remedies available for victims of misrepresentation in contract dealings.

Analyze the impact of undue influence on the legality and enforcement of contracts.

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Definitions:

Debt-Equity Ratio

The ratio indicating a corporation's reliance on debt financing, found by dividing its total debts by the equity held by its shareholders.

After-Tax Cost of Debt

The net cost of debt after accounting for the effects of taxes, reflecting the actual cost to a company.

Cost of Equity

The theoretical compensation paid by a company to its equity investors, or shareholders, for the risk involved in investing their capital.

Weighted Average Cost of Capital (WACC)

The average rate of return a company is expected to pay to all its security holders to finance its assets.