Answer:
$15,500 units
Explanation:
For the computation of break-even sales (units) for the overall enterprise product, E first we need to follow some steps which is shown below:-
Contribution margin = (Selling price - Variable costs)
For Bats $90 - $50
= $40
For Gloves = $105 - $65
= $40
Overall contribution margin = (40 × 40%) + (40 × 60%)
= $40
a.Break-even point = Fixed costs ÷ Contribution margin
= $620,000 ÷ 40
= $15,500 units
The Federal Reserve has been aggressively expanding the money supply by using repurchase agreements in its open market operations. Ignoring other factors, this is likely to result in:
Answer: decrease in interest rates and an increase in inflation
Explanation:
From the question, we are informed that The Federal Reserve has been aggressively expanding the money supply by using repurchase agreements in its open market operations.
This will result in a reduction in the interest rate and since there's more money in circulation, it will bring about an increase in the prices of goods.
Buyers want to pay the lowest possible price, so why would they be willing to pay more than $12 for a pizza?
The most widely used presentation software program is Microsoft PowerPoint. You can produce a professional and memorable presentation using this program if you plan ahead and follow important design guidelines.
1. What text and background should you use in a darkened room?
A. Dark text on a light background
B. Dark text on a dark background
C. Light text on a dark background
2. How can you customize existing templates?
A. Eliminate boldface and italics
B. Adjust the color scheme
C. Add "visual cliches"
D. Add a company logo
E. Select different fonts
Answer:
1. C. Light text on a dark background
2. B. Adjust the color scheme
D. Add a company logo
E. Select different fonts
Explanation:
In order to produce a professional and memorable presentation using Microsoft Powerpoint program, the design guidelines should be applied in certain situations.
The text and background one should use in a darkened room is "Light text on a dark background"
Also, the correct way one can customize existing templates is to do the following:
1. Adjust the color scheme
2. Add a company logo
3. Select different fonts
Presented below is selected information for three regional divisions of Medina Company. Divisions North West South Contribution margin $300,300 $499,000 $399,200 Controllable margin $139,700 $360,600 $209,900 Average operating assets $997,857 $1,567,826 $1,499,286 Minimum rate of return 13 % 14 % 9 % Compute the return on investment for each division. (Round ROI to 0 decimal places, e.g. 15.) North Division % West Division % South Division % Compute the residual income for each division. (Round final answers to 0 decimal places, e.g. 1,255.) North Division $ West Division $ South Division $ Assume that each division has an investment opportunity that would provide a rate of return of 16%. (1) If ROI is used to measure performance, which division or divisions will probably make the additional investment? (2) If residual income is used to measure performance, which division or divisions will probably make the additional investment?
Answer:
North West South
Contribution margin $300,300 $499,000 $399,200
Controllable margin $139,700 $360,600 $209,900
Average operating assets $997,857 $1,567,826 $1,499,286
Minimum rate of return 13% 14% 9%
return on investment (ROI) = controllable margin / average operating assets
North's ROI = $139,700 / $997,857 = 14%
West's ROI = $360,600 / $1,567,826 = 23%
South's ROI = $209,900 / $1,499,286 = 14%
residual income = controllable margin - (average operating assets x minimum rate of return)
North's RI = $139,700 - ($997,857 x 13%) = $9,978.59
West's RI = $360,600 - ($1,567,826 x 14%) = $141,104.36
South's RI = $209,900 - ($1,499,286 x 9%) = $74,964.26
(1) If ROI is used to measure performance, which division or divisions will probably make the additional investment?
North and South divisions should probably make the additional investments since their current ROI is less than 16%
(2) If residual income is used to measure performance, which division or divisions will probably make the additional investment?
All the divisions since their minimum required rate of return is less than 16%.
The ROI of North, West and South are 14%, 23% and 14% respectively. North and south divisions need to make more investment as their ROI is less than 16%. All the division need to make investments.
What is ROI?Return on Investment is the performance measure to evaluate the earnings or profit earned from an investment.It is the ration between the net profit/loss to the initial investment made.
North West South
Given:
Contribution margin= $300,300 $499,000 $399,200
Controllable margin= $139,700 $360,600 $209,900
Average operating assets= $997,857 $1,567,826 $1,499,286
Minimum rate of return= 13% 14% 9%
Return on Investment= (controllable margin/ average operating assets) X 100
North= ($139,700 / $997,857) X 100= 14%West = ($360,600 / $1,567,826) X 100= 23% South= ($209,900 / $1,499,286) X 100 = 14%Residual Income= controllable margin - (average operating assets x minimum rate of return)
North = $139,700 - ($997,857 x 13%) = $9,978.59West = $360,600 - ($1,567,826 x 14%) = $141,104.36South= $209,900 - ($1,499,286 x 9%) = $74,964.26North and South divisions are required to make the additional investments since their current ROI is less than 16%If residual income is used to measure performance, all the divisions requires additional investment, as their minimum required rate of return is less than 16%.
Therefore, the above calulations aptly describes the statements.
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Due Diligence refers to diligently monitoring the interview for lies or half-truths the interviewee might include. Select one: True False
Answer: False
Explanation:
Due diligence is a review, audit or an investigation that is performed in order to confirm certain facts. Due diligence also involves looking at the financial records of w company before having a transaction with the company in order to ascertain some facts.
Due Diligence is not diligently monitoring the interview for lies or half-truths the interviewee might include. This is false.
Rahman stock just paid a dividend of $3.00 per share. Future dividends are expected to grow at a constant rate of 6% per year. What is the value of the stock if the required return is 12%
Answer:value of stock for the required return of 12 % = $53
Explanation:
Given
current dividend just paid = $3.00
dividend to grow at constant rate of 6%
required rate of return =12%
to calculate the value of stock for the requitred return of 12 % , we use the dividend growth model which is
Current price = dividend ( 1 + growth rate )/ (required rate -growth rate )
= 3 x (1+6%) / 12-6 = 3 x 1.06 /6% =3.18/0.06= $53
Therefore value of stock for the requitred return of 12 % ,= $53
2. Explain the following corporate/partnership documents and procedures for healthcare
organizations
Sole Proprietorship
Partnership
Corporation
Limited Liability Entities
When Production decreases what is a very likely possibility? a hire new workers b expand production c purchase new equipment d downsizing
The correct answer is D. Downsizing
Explanation:
In businesses, the term "downsizing" is used to describe a reduction in the number of workers or the total labor force. This often means non-essential workers are fired or even complete departments are eliminated. Moreover, this is likely to occur if the business expenses are higher than its profits or if the production decreases because in both situations fewer workers are needed to eliminate unnecessary expenses. In this context, if production decreases it is likely downsizing occurs.
Duval inc budgets direct materials at $1/liter and requires 4 liters per unit of finished product. April’s activities show usage of 832 liters to complete 196 units at a cost of $798.72. Calculate the direct materials price and quantity variances and indicate favorable or unfavorable results.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Duval inc budgets direct materials at $1/liter and requires 4 liters per unit of the finished product.
April’s activities show usage of 832 liters to complete 196 units at a cost of $798.72.
To calculate the direct material price and quantity variance, we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Actual price= 798.72/832= $0.96
Direct material price variance= (1 - 0.96)*832
Direct material price variance= $33.28 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Standard quantity= 4*196= 784
Direct material quantity variance= (784 - 832)*1
Direct material quantity variance= $48 unfavorable
The management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows:
Year Wind Turbines Biofuel Equipment
1 $280,000 $300,000
2 280,000 300,000
3 280,000 300,000
4 280,000 300,000
The wind turbines require an investment of $887,600, while the biofuel equipment requires an investment of $911,100. No residual value is expected from either project.
Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 1.833 1.736 1.690 1.626 1.528
3 2.673 2.487 2.402 2.283 2.106
4 3.465 3.170 3.037 2.855 2.589
5 4.212 3.791 3.605 3.353 2.991
6 4.917 4.355 4.111 3.785 3.326
7 5.582 4.868 4.564 4.160 3.605
8 6.210 5.335 4.968 4.487 3.837
9 6.802 5.759 5.328 4.772 4.031
10 7.360 6.145 5.650 5.019 4.192
Required:
a. Compute the net present value for each project. Use a rate of 6% and the present value of an annuity of $1 in the table above. If required, round to the nearest dollar.
b. Compute a present value index for each project.
c. Determine the internal rate of return for each project by (a) computing a present value factor for an annuity of $1 and (b) using the present value of an annuity of $1 in the table above. If required, round your present value factor answers to three decimal places and internal rate of return to the nearest percent.
Answer:
A. Wind Turbines = $82,629.57
Biofuel Equipment = $128,431.68
B. Wind Turbines = 1 + ($82,629.57 / $887,600) = 1.093
Biofuel Equipment = 1 + ($128,431.68 / $911,100) = 1.141
C. Wind Turbines = 10%
Biofuel Equipment = 12%
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested
NPV and IRR can be calculated using a financial calculator
Wind Turbines
Cash flow in year 0 = $-887,600,
Cash flow each year from year 1 to 4 = $280,000
I = 6%
NPV = $82,629.57
IRR = 10%
Biofuel Equipment
Cash flow in year 0 = $-911,100
Cash flow each year from year 1 to 4 = $300,000
I = 6%
NPV = $128,431.68
IRR = 12%
present value index = 1 + (NPV / Initial investment)
Wind Turbines = 1 + ($82,629.57 / $887,600) = 1.093
Biofuel Equipment = 1 + ($128,431.68 / $911,100) = 1.141
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button
Waterway Industries expects to purchase $260000 of materials in July and $270000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be
Answer:
Total cash disbursement= $267,500
Explanation:
Giving the following information:
Purchase:
July= $260,000
August= $270,000
Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase.
Cash disbursement August:
Purchase in cash from August= 270,000*0.75= 202,500
Purchase on account July= 260,000*0.25= 65,000
Total cash disbursement= $267,500
Instruments had retained earnings of at December 31, . Net income for totaled , and dividends declared for were . How much retained earnings should report at December 31, ?
Answer:
B. $ 490,000
Explanation:
According to the given situation, the computation of retained earning in the year end is shown below:-
Ending retained earning = Beginning Retained Earnings + Net Income for the year - Dividend
= $360,000 + $180,000 - $50,000
= $490,000
Therefore for computing the ending retained earning we simply applied the above formula.
Bob sells a car to Fred but Bob fails to mention that he disconnected the odometer, which reads 39,000 miles. Bob disconnected the odometer 20,000 miles ago. Which of the following is TRUE?
a. duress.
b. undue influence.
c. puffery.
d. Fraud in the inducement.
e. none of the above.
Answer:
d. Fraud in the inducement.
Explanation:
In this scenario, there was Fraud in the inducement. Fraud refers to the wrongful or criminal deception intended to result in financial or personal gain. Which in this case, by selling a car to Fred and claiming that it has 39,000 miles on (which it does not) they are deceiving Fred in order to make a sale. In doing so they are selling Fred a car that has 20,000 extra miles on it and possibly more internal damage than advertised by the Seller.
Eastern Corporation has $1,000 par value bonds with 4 years to maturity. The bonds pay an 8% coupon rate with semi-annual coupon interest payments. The bond's closing price is quoted at 101.25. Suppose you purchase the bond for the closing price. What is the bond's yield to maturity?
Answer:
7.64%
Explanation:
For computing the yield to maturity we have to applied the RATE formula i.e to be shown in the attachment
Given that,
Present value = $1,000 × 101.25 = $1,012.50
Future value or Face value = $1,000
PMT = 1,000 × 8% ÷ 2 = $40
NPER = 4 years × 2 = 8 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying the above formula,
The yield to maturity is
= 3.82% × 2
= 7.64%
The bond's yield to maturity:
Given Information,
Present value = $1,000 × 101.25 = $1,012.50 Future value or Face value = $1,000 PMT = 1,000 × 8% ÷ 2 = $40 NPER = 4 years × 2 = 8 years
Yield to maturity = 3.82% × 2
Yield to maturity= 7.64%
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A setback of affirmative action is that: a. those benefitting from affirmative action begin to experience self-doubts about their competence and merit. b. women and minorities usually feel deprived. c. employees start to overpower the management. d. people who are the subject of affirmative action are viewed as being more qualified than they actually are.
Answer: those benefitting from affirmative action begin to experience self-doubts about their competence and merit.
Explanation:
Affirmative action is a policy whereby the sex, color, national origin, religion etc are taken into consideration in order to increase the opportunities that are given to a particular set of people. It is used to create fairness.
A setback of affirmative action is that those benefitting from affirmative action begin to experience self-doubts about their competence and merit.
B MC Qu. 7-200 Krepps Corporation produces ... Krepps Corporation produces a single product. Last year, Krepps manufactured 29,010 units and sold 23,900 units. Production costs for the year were as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $214,674 $121,842 $243,684 $319, 110 Sales totaled $1,159,150 for the year, variable selling and administrative expenses totaled $126,670, and fixed selling and administrative expenses totaled $205,971. There was no beginning Inventory. Assume that direct labor is a variable cost. Under absorption costing, the ending Inventory for the year would be valued at:_________ (Round your Intermediate calculations to 2 decimal places.)
a) $158.410
b) $228.410
c) $219.910
d) $185.910
Answer:
a) $158.41
Explanation:
Unit product cost under absorption costing = Direct materials + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead / Total manufactured units
= (214,674 + 121,842 + 243,684 + 319,110) /29,010
= $899,310 / 29,010 unit
= $31 per unit
Ending inventory = $29,010 - $23,900 / $31
= $5110 * 31 per unit
= $158,410
Ambiance Inc. buys back 3,000 shares of its $10 par value common stock from investors at $45 per share. This stock repurchase would be recorded with a debit to: A. Treasury Stock for $30,000, a debit to Additional Paid-in Capital for $105,000, and a credit to Cash for $135,000. B. Treasury Stock and a credit to Cash for $135,000. C. Cash and a credit to Treasury Stock for $135,000. D. Treasury Stock and a credit to Cash for $30,000.
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Statement of retained earnings. Use the data from the following financial statements in the popup window,
LOADING...
Partial Income Statement Year Ending 2014
Sales revenue
$350,200
Cost of goods sold
$141,800
Fixed costs
$42,900
Selling, general, and administrative expenses
$28,000
Depreciation
$46,200
Partial Balance Sheet 12/31/2013
ASSETS
LIABILITIES
Cash
$16,000
Notes payable
$14,000
Accounts receivable
$27,800
Accounts payable
$19,100
Inventories
$48,000
Long-term debt
$189,900
Fixed assets
$368,000
OWNERS' EQUITY
Accumulated depreciation (-)
$140,200
Retained earnings
Intangible assets
$82,000
Common stock
$131,900
Partial Balance Sheet 12/31/2014
ASSETS
LIABILITIES
Cash
$26,200
Notes payable
$11,900
Accounts receivable
$18,800
Accounts payable
$24,100
Inventories
$53,200
Long-term debt
$161,800
Fixed assets
$447,800
OWNERS' EQUITY
Accumulated depreciation (-)
Retained earnings
Intangible assets
$82,200
Common stock
$181,900
. The company paid interest expense of
$ 18 comma 700$18,700
for 2014 and had an overall tax rate of
40 %40%
for 2014. Complete the statement of retained earnings for2014, and determine the dividends paid last year.
The distributed earnings is
$nothing.
(Round to the nearest dollar.)
Complete the statement of retained earnings: (Round to the nearest dollar.)
Statement of Retained Earnings
Year Ending December 31, 2014
Beginning balance
$
Add net income
$
Subtract dividends
$
Ending balance
$
good is excludable if: a. it is Wi-Fi or a similar service. b. people who do not pay cannot be easily prevented from using the good. c. one person's use of the good does not reduce the ability of another person to use the same good. d. people who do not pay can be easily prevented from using the good.
Answer:
The correct answer is:
people who do not pay can be easily prevented from using the good. (d)
Explanation:
Excludable goods or services are those to which the consumer cannot have access unless payment of some form is made. By contrast, a non-excludable good or service is one to which the consumer cannot be prevented from using even without payment. Excludable goods can be further divided into rivalrous and non-rivalrous.
A rivalrous excludable good or service is one in which usage by a consumer or usage by one party prevents or reduces significantly, its use by another consumer or party examples are goods such as clothes, food, cars etc, while non-rivalrous excludable goods/services include tv subscriptions, cinemas, etc.
A small manufacturer that makes clothespins and other household products buys new injection molding equipment for a cost of $500,000. This will allow the manufacturer to make more clothespins in the same amount of time with an estimated increase in sales of %. If the manufacturer currently makes tons of clothespins per year, which sell at per ton, what will be the increase in revenue next year from the new equipment?
Answer:
$337,500
Explanation:
the questions was missing some numbers. I looked for similar questions and found:
increase in sales = 25%current annual production in tons = 75sales price per ton = $18,000increase in total sales = 75 tons x 25% = 18.75 tons
increase in revenue = 18.75 tons x $18,000 = $337,500
Since the question only asks for the increase in revenue, we do not have to calculate anything else.
Stephen Battista argues that public relations should help Under Armour convince customers that the company has a new kind of sports apparel. One way that public relations differs from other kinds of marketing communications is that it substitutes the term ________ for target market. Multiple Choice target audience consumer referent group public market segment
Answer:
The correct answer is the option: Public.
Explanation:
To begin with, the term of "Public Relations" refers to the instrument that the marketing managers have in order to establish better relationships with agents that are outside the company with the primary focus of increasing those relations that will eventually increase the company's public image. Moreover, one the variables that changes when the company decides to use this type of strategy is the fact that the target audience or market changes to be the public in general and that is why that the company forgets about their customers and focus on the public as a whole.
Rank the following investments from lowest to highest, for overall historical returns experienced by investors over long periods of time:
a. Treasury Bills
b. AAA Rated Corporate Bonds
c. Common Stocks
Answer:
Treasury BillsAAA Rated Corporate BondsCommon StocksExplanation:
Treasury Bills are considered risk-less investments. As a result the interest rate will not be adjusted for risk and will be relatively low compared to other securities. It will give the lowest return overtime here.
AAA Rated Corporate Bonds are the highest rated Corporate bonds there are. Even still, they will pay an interest rate that has a little risk premium in it which will make its returns overtime higher than a T-bill.
Common Stocks will provide the highest rate of return overtime on average simply because as well as the dividend payments that are paid to holders, the stock also has a chance of rising in value overtime which will give the holder a Capital gain as well. Something that the other 2 investments cannot give.
TB MC Qu. 9-371 Irving Corporation makes a product with ... Irving Corporation makes a product with the following standards for direct labor and variable overhead: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct labor 0.2 hours $ 15.00 per hour $ 3.00 Variable overhead 0.2 hours $ 5.10 per hour $ 1.02 In November the company's budgeted production was 5,400 units, but the actual production was 5,200 units. The company used 1,660 direct labor-hours to produce this output. The actual variable overhead cost was $7,802. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for November is:
Answer:
Variable manufacturing overhead rate variance= $664 favorable
Explanation:
Giving the following information:
Variable overhead 0.2 hours $ 5.10 per hour
The company used 1,660 direct labor-hours to produce this output. The actual variable overhead cost was $7,802.
To calculate the variable overhead rate variance, we need to use the following formula:
Variable manufacturing overhead rate variance= (standard rate - actual rate)* actual quantity
Actual rate= 7,802/1,660= $4.7
Variable manufacturing overhead rate variance= (5.1 - 4.7)*1,660
Variable manufacturing overhead rate variance= $664 favorable
Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process: Budgeted unit sales 820 Selling price per unit $ 2,130 Cost per unit $ 1,500 Variable selling and administrative expense (per unit) $ 75 Fixed selling and administrative expense (per year) $ 400,000 Interest expense for the year $ 29,000 Required: Prepare the company’s budgeted income statement for the year.
Answer:
Budgeted Income Statement for the year
Sales (820 units × $ 2,130) $1,746,600
Less Cost of Sales (820 units × $ 1,500) ($1,230,000)
Gross Profit $516,000
Less Operating Expenses :
Selling and administrative expense
Variable (820 units × $ 75) ($61,500)
Fixed ($400,000)
Operating Profit $54,500
Less Non - Operating Expenses :
Interest ( $29,000)
Net Income / (Loss) $25,500
Explanation:
Income Statement shows the company`s performance from its operations.
Income / (Loss) = Sales - Expenses.
Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices are $55, $78, and $32, respectively. The variable costs for each product are $20, $50, and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales 7 hours; and Wales 1 hour. Assuming that Widgeon Co. can sell all of the products it can make, what is the maximum contribution margin it can earn per month?
a. $56,000.
b. $34,000.
c. $49,000.
d. $70,000.
Answer:
b. $34,000.
Explanation:
The computation of contribution margin is shown below:-
Particulars Bales Tales Wales
Seeling price $55 $78 $32
Variable cost $20 $50 $15
Contribution
margin $35 $28 $17
Required hour to
process 5 7 1
Contribution margin
per hour 7 4 17
Maximum contribution margin is
= Contribution margin per hour × number of machine hours
= 17 × 2,000
= $34,000
On July 9, Mifflin Company receives an $8,500, 90-day, 8% note from customer Payton Summers as payment on account. Compute the amount due at maturity for the note and interest. (Use 360 days a year.)
Answer:
$8,670 and $170
Explanation:
The computation of the amount due at the time of maturity and the interest is shown below:
For interest, it is
= Received amount × rate of interest × number of months ÷ total number of months in a year
= $8,500 × 8% × 90 ÷ 360 days
= $170
And, the amount due at the time of maturity of the note is
= Received amount + interest
= $8,500 + $170
= $8,670
The bookkeeper prepared a check for $48 but accidently recorded it as $95. When preparing the bank reconciliation, this should be corrected by:
Answer:
Adding $47 to the book balance.
Explanation:
The above is an example of transposition error, which is caused by substituting two or more sequential digits ; mistake would be corrected by adding $47 ($95 -$48) to the book balance.
A technical analyst has been charting the price movements of ABC stock. The stock has been fluctuating in price between $63 and $67 per share for the past 3 months. If the analyst expects a breakout through the support level, which order should be placed
Answer:
The trader should orders to buy ABC stock or take a long position to the stock.
Explanation:
The stock has been fluctuating for 3 months, hence, its value should be well analysed. Now if there is a breakout through the support level, usually with a good quarterly performance report, the stock is likely to go "bull". Buying and holding the stock is a rational decision.
Assume that a purely competitive firm has the following schedule of average and marginal costs:
Output AFC AVC ATC MC
1 $300 $100 $400 $100
2 150 75 225 50
3 100 70 170 60
4 75 73 148 80
5 60 80 140 110
6 50 90 140 140
7 43 103 146 180
8 38 119 156 230
9 33 138 171 290
10 30 160 190 360
Instructions: Enter all values as whole numbers. If any values are negative, please enter them with a (-) sign.
a) At a price $55, the firm would produce ____ units of output. At a price of $120, the firm would produce ____ units of output. At a price of $200, the firm would produce ____ units of output.
b) The per-unit economic profit (or loss) is calculated by subtracting at a particular level of output from the product price. This per-unit economic profit is then multiplied by the number of units of ___ to determine the economic profit for the competitive firm.
i) At the product price of $200, the average total costs are $____, so per-unit economic profit is
$____. Multiplying this amount by the number of units of output results in an economic
profit of $____.
ii) At the product price of $120, the average total costs are $____, so per-unit economic losses are $____. Multiplying this amount by the number of units of output results in an economic loss of $____.
Answer:
a) At a price $55, the firm would produce 3 units of output.
At a price of $120, the firm would produce 6 units of output.
At a price of $200, the firm would produce 7 units of output.
The rule is Price = Marginal Cost for a competitive firm
b) The per-unit economic profit (or loss) is calculated by subtracting ATC at a particular level of output from the product price. This per-unit economic profit is then multiplied by the number of units of output to determine the economic profit for the competitive firm.
i) At the product price of $200, the average total costs are $146 , so per-unit economic profit is $54 . Multiplying this amount by the number of units of output results in an economic profit of $378 .
Explanation:
At P = 200, output produced is 7 units
ATC is $146
Per-unit economic profit = 200 - 146 = $54
Hence, Total economic profit = $54 x 7 = $378
ii) At the product price of $120, the average total costs are $140 , so per-unit economic losses are $ -20. Multiplying this amount by the number of units of output results in an economic loss of $-100.
Explanation: At P = 20, output produced will be 5 units. 6th unit will not be produced as it will result in even greater loss.
Total loss = ($140 - $120) x 5 = $100
Variable versus absorption costing Colorado Business Tools, manufactures calculators. Costs incurred in making 9,500 calculators in February included 29,450 of fixed manufacturing overhead. The total absorption cost per calculator was $10.25.
Required:
a. Calculate the variable cost per calculator.
b. The ending inventory of pocket calculators was 750 units higher at the end of the month than at the beginning of the month. By how much and in what direction (higher or lower) would operating income for the month of February be different under variable costing than under absorption costing?
c. Express the pocket calculator cost in a cost formula.
Answer:
Variable cost per unit = 7.15
Difference in profit = $2,325
Cost formula : Y = 3.1 + 7.15X
Explanation:
Variable cost per calculator =Full cost - Fixed cost per unit
Full cost= $10.25
Fixed cost per unit = Total fixed costs / Number of units
= $29,450/9,500 units= 3.1
Variable cost per calculator = $10.25 - 3.1 = 7.15
Difference in profit = OAR (fixed cost per unit)× change in inventory
= 3.1 × 750 = $2,325
The absorption costing profit would be higher if there is an increase in increase at the end of the period and vice versa. Hence , an increase in inventory by 750 units would mean that absorption costing profit is higher by $2,325
Cost of calculator
Y = a +bx
Y = 3.1 + 7.15X
Y- total cost per unit
Fixed cost per unit = 3.1
Variable cost per unit = 7.15
Variable cost per unit = 7.15
Difference in profit = $2,325
Cost formula : Y = 3.1 + 7.15X