Answer:
a.$12,950 increase
Explanation:
If sales increases by $37,000; then Variable cost will increase by $37,000*65% = $24,050
Variable cost is 65% of sales but Fixed cost will not increase on increase in sales.
Therefore, Operating income will increase by:
= $37,000 - $24,050
= $12,950
Blue Corporation purchased a truck at the beginning of 2020 for $61,000. The truck is estimated to have a salvage value of $2,440 and a useful life of 195,200 miles. It was driven 28,060 miles in 2020 and 37,820 miles in 2021. Compute depreciation expense using the units-of-production method for 2020 and 2021.
Depreciation expense for 2020
Depreciation expense for 2021
Answer:
Depreciation expense for 2020 = $8,418
Depreciation expense for 2021 = $11,346
Explanation:
Depreciation expense using the units-of-production method is determined as follows :
Depreciation expense = Depreciation rate x annual usage
where,
Depreciation rate = (Cost - Salvage Value) ÷ Estimated usage
= ($61,000 - $2,440) ÷ 195,200 miles
= $0.30 per mile
thus,
Depreciation expense for 2020
Depreciation expense = $0.30 per mile x 28,060 miles
= $8,418
Depreciation expense for 2021
Depreciation expense = $0.30 per mile x 37,820 miles
= $11,346
Current GAAP requires a company to account for a change in accounting estimate that impacts multiple periods during the period of change. the period of change and past periods. the period of change, past periods, and future periods. the period of change and future periods.
Answer:
Current GAAP requires a company to account for a change in accounting estimate that impacts multiple periods
during the period of change.
Explanation:
Changes in accounting estimates mostly relate to depreciation and bad-debt expenses. While changes in accounting principles, mainly involving inventory valuation and revenue recognition are required to be done retroactively, with affected financial statements restated, changes in estimates are not required to be applied retroactively. No cumulative effect or retrospective adjustment is required in the year of change.
Ahrends Corporation makes 70,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials $ 17.80 Direct labor 19.00 Variable manufacturing overhead 1.00 Fixed manufacturing overhead 17.10 Unit product cost $ 54.90 An outside supplier has offered to sell the company all of these parts it needs for $48.50 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $273,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $8.20 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products. What is the financial advantage (disadvantage) of purchasing the part rather than making it
Answer:
$147,000
Explanation:
The computation of the financial advantage (disadvantage) of purchasing the part rather than making it is shown below;
Particulars Make Buy
Direct material $1,246,000 (70,000 × $17.80)
Direct labour $1,330,000 (70,000 × $17.80)
Variable manufacturing
overhead $70,000 (70,000 × $1)
Fixed manufacturing
overhead $623,000 (70,000 × ($17.10 - $8.20))
Purchase cost $3,395,000 (70,000 × $48.50)
Opportunity cost $273,000
Total cost $3,542,000 $3,395,000
So, the Advantage is
= ($3,542,000 - $3,395,000)
= $147,000
The financial advantage that Ahrends Corporation will get by purchasing the part rather than making it is $147,000.
Data and Calculations:
Number of units produced per year = 70,000
Direct materials $ 17.80
Direct labor 19.00
Variable manufacturing overhead 1.00
Total variable costs = $37.80
Fixed manufacturing overhead 17.10
Unit product cost $ 54.90
Outside supplier's price = $48.50
Total avoidable costs:
Direct materials $ 17.80
Direct labor 19.00
Variable manufacturing overhead 1.00
Fixed manufacturing cost = 8.90
Total avoidable costs = $46.70
Make Buy Differential Analysis
Variable costs $3,269,000 $3,395,000 ($126,000)
Additional contribution (273,000) 273,000
Total costs/savings $3,269,000 $3,122,000 $147,000
Thus, Ahrends Corporation will gain $147,000 by purchasing the part rather than making its in-house.
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he average borrowing rate for interest bearing debt is calculated as: Select one: A. Interest Expense divided by Average Interest-bearing Debt B. Interest Expense divided by Average Long-term Debt C. Interest Paid divided by Average Liabilities D. Interest Expense divided by Average Liabilities
Answer:
A. Interest Expense divided by Average Interest-bearing Debt
Explanation:
A bond can be defined as a debt or fixed investment security, in which a bondholder (investor or creditor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time. The bond issuer are expected to return the principal (face value) at maturity with an agreed upon interest (coupon), which are paid at fixed intervals.
An interest-rate risk can be defined as the risk associated with bond owners due to fluctuating interest rates. This risk has a direct level of impact on the value of fixed income securities such as bonds.
An interest rate can be defined as an amount of money that is charged as a percentage of the total amount borrowed from an individual or a financial institution.
Mathematically, the average borrowing rate (ABR) for an interest bearing debt is calculated using the formula;
[tex] ABR = \frac {Interest \; Expense}{Average \; Interest \ bearing \; Debt} [/tex]
The historical rate of return on stock A was regressed on the rate of return of stock M (the explanatory variable). The slope of the regression line was 0.8, the standard deviation of the residuals was 0.3 and the standard deviation of the rate of return of M was 0.2. What was the standard deviation of the rate of return on A
Answer:
0.3400
Explanation:
Total variance of security = (Standard deviation of security)^2 = (Beta)^2*(Standard deviation of security)^2 + (Standard deviation of error terms)^2
Total variance of security = (Standard deviation of security)^2 = (0.8)^2*(0.2)^2 + (0.3)^2
Total variance of security = (Standard deviation of security)^2 = 0.1156
Standard deviation of the rate of return on A = √0.1156
Standard deviation of the rate of return on A = 0.3400
Item7
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Skipped
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Internet users aged 15 and older are expected to buy about ________ worth of products and services online in 2022 (excluding travel, automobile, and prescription drugs).
Multiple Choice
$200 million
$900 million
$40 billion
$100 billion
$500 billion
Answer:
$500 billion
Explanation:
A TV ad run by Miller Lite is a response to a controversial Bud Light campaign. Bud Light made headlines with the claim that its beer is healthier due to the lack of corn syrup. Miller responded with a parody of its competitor's campaign. This is an example of _______.
Answer:
Comparative advertising
Explanation:
In this comparative advertising strategy, the product of the company would be compared as the superior product with the competitor.
Since in the given situation, the miller lite compared its beer with the bud light
So this given situation represent the example of comparative advertising where the products of the two company are compared
Therefore the above represent the answer
Hardy Company must maintain a compensating balance of $50,000 in its checking account as one of the conditions of its short-term 6% bank loan of $500,000. Hardy's checking account earns 2% interest. Ordinarily, Hardy would maintain a $20,000 balance in the account for transaction purposes. What is the loan's approximate effective interest rate
Answer:
The loan's approximate effective interest rate is 6.17%.
Explanation:
Interest expense = Short term bank loan * Short term bank loan interest rate = $500,000 * 6% = $30,000
Interest income = Balance in the account checking account * Interest rate on checking account balance = $20,000 * 2% = $400
Net interest expense = Interest expense - Interest income = $30,000 - $400 = $29,600
Available amount = Short term bank loan interest rate - Balance in the account checking account = $500,000 - $20,000 = $480,000
Effective interest rate = Net interest expense / Available amount = $29,600 / $480,000 = 0.0617, or 6.17%
Therefore, the loan's approximate effective interest rate is 6.17%.
The Bay Fig Corporation has $350,000 of taxable income from operations for the current year, and dividends of $50,000 received from 10-percent-owned domestic corporations. How much is the Bay Fig Corporation's dividends received deduction for the current year
Answer: $25,000
Explanation:
When a company owns less than 20% of another company and receives dividends from that company, they are allowed to deduct 50% of that dividend for tax purposes.
Bay Fig owns 10%(less than 20%) of the domestic corporations so qualifies for the 50% reduction:
= Dividends * 50%
= 50,000 * 50%
= $25,000
What happens if you only make the minimum payment on your credit card statement? |
Answer:
then your credit does not go into default
Explanation:
tell me if im right please if im not sorry
Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $760,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $860,000, which includes interest revenue of $24,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%.
Required:
Prepare the journal entry to record income taxes.
Answer:
Dr Income Tax Expense $209,000
Cr Income Tax Payable $180,500
Cr Deferred Tax Liability $28,500
Explanation:
Preparation of the journal entry to record income taxes
First step is to determine the Current tax liability and Deferred tax liability
Current year Future year
Pre Tax Accounting Income $860,000 $0
Permanent differences
Municipal bond Interest ($24,000) $0
Temporary differences
Depreciation expense ($114,000) $114,000
[($760,000*40%)-($760,000/4)]
Taxable income $722,000 $114,000
Enacted tax rate 25% 25%
Current tax liability $180,500
($772,000*25%)
Deferred tax liability $28,500
($114,000*25%)
Now let Prepare the journal entry
Dr Income Tax Expense $209,000
($180,500+$28,500)
Cr Income Tax Payable $180,500
Cr Deferred Tax Liability $28,500
(Being income tax and deferred tax recorded for first year)
Price rises from $10 to $11, and the quantity demanded falls from 100 units to 95 units. What is the price elasticity of demand using the midpoint formula between these two prices in absolute terms (round to 2 decimal places)
Answer:
0.54
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = midpoint change in quantity demanded / midpoint change in price
Midpoint change in quantity demanded = change in quantity demanded / average of both demands
change in quantity demanded = 100 - 95 = 5
average of both demands = (100 + 95) / 2 = 97.5
Midpoint change in quantity demanded = 5 / 97.5 = 0.051282
midpoint change in price = change in price / average of both price
change in price = $11 - $10 = 1
average of both price = ($11 + $10) / 2 = 10.5
midpoint change in price = 1 / 10.5 = 0.095238
Price elasticity of demand = 0.051282 / 0.095238 = 0.54
Jobs Inc. has recently started the manufacturer of Tri-Robo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a smartphone. The cost structure to manufacture 21, 300 Tri-Robos is as follows.
Cost
Direct materials $1,086,300
Direct labor ($39 per robot) 830,700
Variable overhead ($5 per robot) 106,500
Allocated fixed overhead ($28 per robot) 600,000
Total $2,623,500
Jobs is approached by Tiench Inc, which offers to make Tri-Robo for $113 per unit of $2,406,900.
Following are independent.
Assume that $405,000 of the fixed overhead cost can be avoided. Enter negative amount.
Make Buy Net Income Increase (Decrease)
Direct materials $ $ $
Direct labor
Variable overhead
Fixed overhead
Purchased price
Totals $ $ $
Using incremental analysis, determine whether Jobs should accept this offer.
The offer _____
Assume that none of the fixed can be avoided. However, if the robots are purchased from Tienh Inc, Jobs can use the released productive resources to generate additional income f $375,000 Enter negative amount.
Make Buy Net Income Increase (Decrease)
Direct materials $ $ $
Direct labor
Variable overhead
Fixed overhead
Opportunity cost
Purchased price
Totals $ $ $
Based on the above assumptions, indicate whether the offer should be accepted or rejected?
The offer _____
Answer:
Jobs Inc.
1. The offer should not be accepted.
2. The offer should be accepted.
Explanation:
a) Data and Calculations:
Units of Tri-Robos to be manufactured = 21,300
Costs of manufacturing:
Direct materials $1,086,300
Direct labor ($39 per robot) 830,700
Variable overhead ($5 per robot) 106,500
Allocated fixed overhead ($28 per robot) 600,000
Total $2,623,500
Unit cost = $123.17 ($2,623,500/21,300)
Price from Tiench Inc per unit = $113
Total offer price = $2,406,900 ($113 * 21,300)
Make Buy Net Income Increase (Decrease)
Direct materials $1,086,300 $ $
Direct labor 830,700
Variable overhead 106,500
Fixed overhead 195,000
Purchased price 2,406,900
Totals $2,218,500 $2,406,900 $188,400 Decrease
Make Buy
Direct materials $1,086,300
Direct labor ($39 per robot) 830,700
Variable overhead ($5 per robot) 106,500
Allocated fixed overhead ($28 per robot) 600,000
Total $2,623,500 $2,406,900
Opportunity cost 375,000
Total $2,998,500 $2,406,900 $591,600
Pacific Cruise Lines is a defendant in litigation involving a swimming accident on one of its three cruise ships.
Required:
1. The likelihood of a payment occurring is probable, and the estimated amount is $1.11 million.
2. The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $0.91 to $1.11 million.
3. The likelihood of a payment occurring is reasonably possible, and the estimated amount is $1.11 million.
4. The likelihood of a payment occurring is remote, while the estimated potential amount is $1.11 million.
Record the necessary entry for the scenarios given above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in dollars, not in millions, (i.e. 5.5 should be entered as 5,500,000).)
Answer: See explanation
Explanation:
The necessary journal entry with regards to the scenarios given above will be:
1. Debit Loss $1,110,000
Credit Contingent liability $1,110,00
2. Debit Loss $910,000
Credit Contingent Liability $910,000
3. No journal entry
4. No journal entry
Note that there won't be a journal entry for (3) and (4) since the likelihood of a payment occurring is reasonably possible, and remote.
Which of the following is true of scrum?
A) It was developed to overcome the problems that occur when using the Business Process Modeling Notation (BPMN).
B) It does not adapt to change easily.
C) It is generic enough to be used for the development of business processes, information systems, and applications.
D) Its work periods are usually three months or longer.
E) Answers B and D are correct.
Statement that explains scrum as regards this question is:A: It was developed to overcome the problems that occur when using the Business Process Modeling Notation (BPMN).
Scrum can be regarded as a framework which helps teams to work together. It can be considered as an agile project management framework, and it is developed so that the problems that is associated with Business Process Modeling Notation can be overcomed.Therefore, option A is correct.
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Legos makes multiple lines of products, including Duplos (for toddlers), various Lego kits and games (for boys 7-12 years of age), Friends and Disney Princess Lego kits (for girls 7-12 years of age), Technics (automated kits for teenage boys), and Legos Architecture (for young adults and college students). For each of these product lines, Lego targets a specific segment of consumers and develops different promotional strategies to appeal to each segment. This illustrates:
Question Completion:
O an undifferentiated targeting strategy.
O a differentiated (multi-segment) targeting strategy.
O a concentrated targeting strategy.
O none of these.
O an non-concentrated targeting strategy.
Answer:
Legos
This illustrates:
O a differentiated (multi-segment) targeting strategy.
Explanation:
The company is using a differentiated, multi-segment targeting strategy. The multi-segments targeted are toddlers, boys 7-12 years of age, girls 7-12 years of age, teenage boys, and young adults and college students. With this differentiated multi-segment marketing, Legos targets each segment in a different way, providing unique benefits to the different market segments. The purpose is to maximize sales and profits by meeting the multivariate needs of the various segments.
A hospitality company is evaluating building a new hotel in Bloomington (capital project) that management forecasts will generate $45,000 each year over its six (6) year life. If the required rate of return given the project's identified risks is 12% (percent), and the project's up front costs are estimated at $165,000, should management go forward with the project?
a. Management should approve the new hotel since the project's NPV is positive.
b. Management should reject the new hotel project as the project's NPV is negative.
c. Unable to determine given information.
Answer:
A
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
When choosing between positive NPV projects, choose the project with the highest NPV first because it is the most profitable.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-165,000
Cash flow in year 1 - 6 = $45,000
I = 12%
NPV = $20,013.33
the project should be approved because NPV is positive
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
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Answer:
sjhdkwnsksnaksndksnwkjssmnzkanzkdndns
Windsor, the owner of Windsor's Sandwiches, contacts Gary, a new supplier. He promises Gary that he will pay him $375 if Gary delivers 20 pounds of cheese the following morning. Gary promises to make the delivery as requested by Windsor. What type of contract is formed and why?
Answer: bilateral contract
Explanation:
Based on the information given in the question, the type of contract formed is a bilateral contact.
A bilateral contract refers to a contract whereby both parties that are involved make promises to perform a certain action. The promise of some party will be the consideration on which the promise of the other party will be based.
Since Windsor promises Gary that he will pay him $375 if Gary delivers 20 pounds of cheese the following morning and Gary promises to make the delivery as requested by Windsor, then this is a bilateral contract.
If the required direct materials purchases are 15000 pounds, the direct materials required for production is three times the direct materials purchases, and the beginning direct materials are three and a half times the direct materials purchases, what are the desired ending direct materials in pounds?
Answer: 22500
Explanation:
The the desired ending direct materials in pounds will be calculated thus:
purchased (p) = 15000
Required will be = 3 × purchased = 3p
Beginning direct material = 3.5p
Therefore, the desired ending direct material will be:
= 3.5p + p - 3p
= 1.5p
= 1.5 × 15000
= 22500
What is the first step in recording a transaction?
Answer:
The first step in the recording process is to analyze the transaction, determine the accounting entries and record them in the appropriate accounts. The analysis includes an examination of the paper or electronic record of the transaction, such as an invoice, a sales receipt or an electronic transfer.
Explanation:
On the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flows:
ACCOUNT Land ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
Jan. 1 Balance 868,000
Mar. 12 Purchased for cash 104,300 972,300
Oct. 4 Sold for $95,550 63,840 908,460
Answer and Explanation:
The items that should be reported on the cash flow statement is shown below;
On March 12 Purchase of fixed assets - investing activity - deducted - $104,300
On Oct 4 Sale of fixed assets - investing activity - added - $63,840
Gain on sale of fixed assets - operating activities - deducted - $31,710 ($95,550 - $63,840)
Marko, Inc., is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $5,600, $10,600, and $16,800 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determined that a rate of return of 10 percent is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.
Answer:
$26,473.33
Explanation:
The amount Marko would be willing to pay today can be determined by calculating the present value of the cash flows
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow in year 1 = $5,600
Cash flow in year 2 = $10,600
Cash flow in year 3 = $16,800
I = 10%
PV = $26,473.33
To find the PV 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
When a monopolist increases the amount of output that it produces and sells, the price of its output Group of answer choices stays the same. increases. decreases. may increase or decrease depending on the price elasticity of demand.
Answer:
Decreases
Explanation:
Monopolist is the sole seller of a good or service in a market. Eg : Indian Railways
It has a downward sloping demand curve, implying price & quantity demanded are inversely related. So, more quantity can be sold at lower prices, & higher price leads to less quantity sold.
Hence : When a monopolist increases the amount of output that it produces and sells, the price of its output Decreases.
1 My sister.....coming home this weekend. (is / are).
2 My sisters......coming home this weekend. (is / are).
3 I....going to Disneyland in March (am / are).
4 We....going to Disneyland in March. (am / are) .
5 He always.....his toys with me(share e/shares).
6 They always.....their toys with me.(share/ shares).
7 My class.....a lot of homework today. (has/have).
8 We.......a lot of homework today.(has/have).
9 You ......nice in that dress. (look looks).
10 She..... nice in that dress. (look looks).
Answer:
1. is
2. are
3. am
4. shares
5. share
6. has
7. has
8. have
9. look
10. looks
Explanation:
pay attention In class
Frank Gentry works as a sales representative for Tech-Med, a firm that manufactures hospital supplies. Recently, a prospective buyer walked into the Tech-Med store seeking beds for the children's ward in his private clinic. Frank quickly showed the client the range of beds available that were designed specifically for children. In which of the following steps of the selling process was Frank?
a. presentation and demonstration
b. follow-up
c. qualifying
d. handling objections
e. prospecting
Answer:
a. presentation and demonstration
Explanation:
It is correct to say that Frank is in the presentation and demonstration stage in the sales process, as the question says that he showed the customer the variety of available beds designed for children, that is, he presented the product to the customer and demonstrated that it would satisfy your needs, in this case the seller reiterates the value and benefits of the product so that there is interest on the part of the consumer in making the sale.
Imagine that a certain uncle or your whom you don't often see, takes a special interest in your education and sometimes sends you money. write him a letter giving him news of your academic work
Explanation:
Dear uncle,
First of all I would like to thank you for all the attention you have given to my education, it is clear that your financial contribution has helped me a lot to achieve my academic goals, but I am proud to have in my family a person like you, who considers the education an opportunity for life and future change for me and the country.
So I come to bring you news about my college that I am sure will make you happy! In this semester I wrote a scientific article on environmental management that was highly praised by my professors and colleagues, and made me receive an invitation to present at a management and technology congress at a renowned college in the region. This topic is very relevant today and I am happy to be a disseminator of such a relevant subject.
Just as you have given me an opportunity to have a better future through studies, I will endeavor to disseminate relevant information that relates management and environmental sustainability as tools for promoting environmental responsibility in organizations, so that in the future companies will not only be profitable, be instruments that protect the environment and guarantee the quality of life of future generations.
With love,
your dear niece
Greg, a landscaper, is planning on opening his own landscaping company. He currently earns $50,000 per year working for his uncle but he will need to quit that job. He hires one employee at an annual wage of $15,000. He needs to pay rent of $8,000 per year. He plans to use $12,000 in savings to pay for the equipment he needs, the market value of the equipment at the end of the year is $10,000. Also he needs to buy $3,000 of goods and services from other firms. The current interest rate on savings is 7 percent. Greg predicts that the revenue from the new landscaping company is $80,000 a year. What is total opportunity cost incurred by Greg in running his own business
Answer: $52,840
Explanation:
The opportunity cost are the benefits he will give up to pursue his current venture of landscaping.
= Salary from working for uncle + Interest on the Savings to be used in business + Difference in market value if he waits till the end of the year
= 50,000 + (7% * 12,000) + (12,000 - 10,000)
= $52,840
The total opportunity cost incurred by Greg in running his own business is $52,840.
It should be noted that opportunity cost simply means the real cost of a foregone alternative. Opportunity cost arises as a result of scarcity of resources.
Therefore, the total opportunity cost incurred by Greg in running his own business will be:
= Salary from working for uncle + Interest on the Savings to be used in business + Difference in market value if he waits till the end of the year
= 50,000 + (7% × 12,000) + (12,000 - 10,000)
= 50000 + 840 + 2000
= $52,840
In conclusion, the opportunity cost is $52840.
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Sutherland manufactures and sells 50,000 laser printers each month. A principal component part in each printer is its paper feed drive. Sutherland's plant currently has the monthly capacity to produce 80,000 drives. The unit costs of manufacturing these drives (up to 80,000 per month) are as follows. Variable costs per unit: Direct materials $ 23 Direct labor 15 Variable manufacturing overhead 2 Fixed costs per month: Fixed manufacturing overhead $ 1,300,000 Desk-Mate Printers has offered to buy 10,000 paper feed drives from Sutherland to be used in its own printers. a. Compute the average unit cost of manufacturing each paper feed drive assuming that Sutherland manufactures only enough drives for its own laser printers. b. Compute the incremental unit cost of producing an additional paper feed drive. c. Compute the per-unit sales price that Sutherland should charge Desk-Mate to earn $140,000 in monthly pretax profit on the sale of drives to Desk-Mate.
Answer:
Sutherland
a. The average unit cost of manufacturing each paper feed drive is:
= $56.25.
b. The incremental unit cost of producing an additional paper feed drive is:
= $170.
c. The per-unit sales price that Sutherland should charge Desk-Mate to earn $140,000 in monthly pre-tax profit on the sale of drives to Desk-Mate is:
= $184.
Explanation:
a) Data and Calculations:
Production and sales of laser printers per month = 50,000
Monthly production capacity for paper feed drives = 80,000
Unit costs of producing drives:
Variable costs per unit:
Direct materials $ 23
Direct labor 15
Variable manufacturing overhead 2
Variable cost per unit $40 $3,200,000 (80,000 * $40)
Fixed costs per month:
Fixed manufacturing overhead $1,300,000
Total production costs = $4,500,000
Average unit cost = $56.25 ($4,500,000/80,000)
Incremental unit cost of producing an additional paper feed drive:
Variable cost = $40 * 10,000 = $400,000
Additional fixed cost per month = $1,300,000
Total incremental costs = $1,700,000
Unit cost = $170 ($1,700,000/10,000)
Total incremental costs = $1,700,000
Monthly pre-tax target profit 140,000
Expected sales revenue = $1,840,000
Sales price per drive = $184 ($1,840,000/10,000)
Consumer surplus is Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a positive in the case of a monopolist practicing perfect price discrimination. b zero for a single-price monopolist. c equal to the price minus the marginal cost. d less in the case of a single-price monopoly than in the case of a perfectly competitive industry.
Answer:
d less in the case of a single-price monopoly than in the case of a perfectly competitive industry.
Explanation:
A monopoly is a market structure which is typically characterized by a single-seller who sells a unique product in the market by dominance. This ultimately implies that, it is a market structure wherein the seller has no competitor because he is solely responsible for the sale of unique products without close substitutes. Any individual that deals with the sales of unique products in a monopolistic market is generally referred to as a monopolist.
For example, a public power company is an example of a monopoly because they serve as the only source of power utility provider to the general public in a society.
In a perfect competition, there are many buyers and sellers of homogeneous products, and there is free entry and exit in the market.
This simply means that, in a perfectly competitive market, there are many buyers and sellers (price takers) of homogeneous products (standardized products with substitute) and the market is free (practically open) to all individuals or business entities that are willing to trade all their goods and services.
Generally, a perfectly competitive market is characterized by the following features;
1. Perfect information.
2. No barriers, it is typically free.
3. Equilibrium price and quantity.
4. Many buyers and sellers.
5. Homogeneous products.
Examples of a perfectly competitive market are the Agricultural sector, e-commerce and the foreign exchange market.
Generally, consumer surplus is less in the case of a single-price monopoly than in the case of a perfectly competitive industry.