Answer:
They will go broke
Explanation:
because if they spend over budget thats not enough money so they will be broke
The portfolio with the lowest standard deviation for any risk premium is called the_______. A.efficient frontier portfolio B.CAL portfolio C.global minimum variance portfolio D.optimal risky portfolio
Answer:
The right approach is Option C (global minimum variance portfolio).
Explanation:
A completely-invested portfolio with either a low uncertainty factor seems to be the GMV portfolio. This same GMV portfolio corresponds to or is situated mostly on the left end including its FI-efficient frontier. Although aside from either the full-investment requirement, no restrictions are enforced, the GMV portfolio deals for analytical portrayal.The latter options offered are not relevant to something like the scenario presented. So that is indeed the correct solution.
A consumer is currently spending all of her available income on two goods: music CDs and DVDs.At her current consumption bundle she is spending twice as much on CDs as she is on DVDs.If the consumer has $120 of income and is consuming 10 CDs and 2 DVDs,what is the price of a CD?
A) $4
B) $8
C) $12
D) $20
Answer:
D) $20
Explanation:
Calculation for the price of a CD
Since the Total income is 120 then let the Income spent on DVDs be x and let them income spent on CDs be 2*x
First step
x + 2*x = $120
3*x = $120
x=$120/3
x = $40
Second step
Let the Price of one CD be y
Hence,
2*y = $40
y = $40 / 2
y = $20
Therefore the price of a CD will be $20
Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July’s activities: On July 1:
Beginning inventories 850 units, 60% complete
Direct materials cost $5,000
Conversion costs $4,000
During July:
Number of units started 15,000
Direct materials added $155,000
Conversion costs added $83,520
On July 31:
Ending inventories 1,600 units, 40% complete
Using the FIFO method and rounding cost per unit to four decimal places, the cost of goods completed and transferred out during July was:_________
Answer:
$227,270
Explanation:
The computation of the cost of goods completed and transferred out is shown below
Particulars Direct materials Conversion costs
Beginning inventories 0 340
(850 × 40%)
Units started
and completed 13400 13400
(15,000 - 1,600)
Ending inventories 1600 640
(1,600 × 40%)
Equivalent units 15000 14380
Current costs $155000 $83520
Cost per Equivalent unit $10.3333 $5.8081
Cost of goods completed and transferred out is
= ($5000 + $4000) + (340 × 5.8081) + 13400 × (10.3333 + 5.8081)
= $227,270
The stockholders' equity of Gaulin Company at the start of the current year follows: Common stock, $ 5 par value, 350,000 shares authorized; 120,000 shares issued and outstanding $ 600,000 Paid-in capital in excess of par value 600,000 Retained earnings 346,000 During the current year, the following transactions occurred: Jan. 5 Issued 10,000 shares of common stock for $12 cash per share. Jan. 18 Purchased 4,000 shares of common stock for the treasury at $14 cash per share. Mar. 12 Sold one-fourth of the treasury shares acquired January 18 for $17 cash per share. July 17 Sold 500 shares of the remaining treasury stock for $13 cash per share. Oct. 1 Issued 5,000 shares of 8%, $22 par value preferred stock for $32 cash per share. This is the first issuance of preferred shares from the 50,000 authorized shares.
(a) Use the financial statement effects template to indicate the effects of each transaction. Use negative signs with answers, when appropriate.
Balance Sheet
Transaction Cash Asset + Noncash Assets = Liabilities + Contributed Capital + Earned Capital
Jan. 5 Answer Answer Answer Answer Answer Jan. 18 Answer Answer Answer Answer Answer Mar. 12 Answer Answer Answer Answer Answer July. 17 Answer Answer Answer Answer Answer Oct. 1 Answer Answer Answer Answer Answer Income StatementRevenue - Expenses = Net IncomeAnswer Answer AnswerAnswer Answer AnswerAnswer Answer AnswerAnswer Answer AnswerAnswer Answer Answer(b) Prepare the December 31, 2014, stockholders' equity section of the balance sheet assuming that the company reports net income of $65,800 for the year.Stockholders' EquityPaid-in capital 8% Preferred stock, $25 par value, 50,000 shares authorized, 5,000 shares issued and outstanding $Answer Common stock, $5 par value, 350,000 shares authorized; 260,000 shares issued Answer $AnswerAdditional paid-in capital Paid-in capital in excess of par value-preferred stock Answer Paid-in capital in excess of par value-common stock Answer Paid-in capital from treasury stock Answer AnswerTotal paid-in capital AnswerRetained earnings AnswerAnswerLess: Treasury stock (2,500 shares) at cost AnswerTotal Stockholders' Equity $ Answer
Answer:
common stock $600,000
additional paid in capital, common stock $600,000
retained earnings $346,000
I used an excel spreadsheet because there is not enough room here
1) Dr Cash 120,000
Cr Common stock 50,000
Cr Additional paid in capital, common stock 70,000
2) Dr Treasury stocks 56,000
Cr Cash 56,000
3) Dr Cash 17,000
Cr Treasury stock 14,000
Cr Additional paid in capital, common stock 3,000
4) Dr Cash 6,500
Dr Additional paid in capital, common stock 500
Cr Treasury stock 7,000
5) Dr Cash 160,000
Cr Preferred stocks 110,000
Cr Additional paid in capital, preferred stock 50,000
Prepare an income statement (LO1-3)
Below are the account balances for Cowboy Law Firm at the end of December.
Accounts Balances
Cash $ 5,400
Salaries expense 2,200
Accounts payable 3,400
Retained earnings 3,900
Utilities expense 1,200
Supplies 13,800
Service revenue 9,300
Common stock 6,000
Required:
Use only the appropriate accounts to prepare an income statement.
COWBOY LAW FIRM
Income Statement
For the Period Ended December 31
Expenses:
Total expenses
Answer:
$5,900
Explanation:
Preparation of an Income statement
REVENUE :
Service revenue $9,300
Less EXPENSES:
Salaries expense $2,200
Utilities expense $1,200
Total Expenses($3,400)
($2,200+$1,200)
Net income $5,900
($9,300-$3,400)
Therefore the Net income amount for the income statement will be $5,900
Landings Glassware Company issues $1,150,000 of 15%, 10-year bonds at 95 on February 28, 2019. The bonds pay interest on February 28 and August 31. The journal entry to record the issuance includes a ________.A. debit to Cash for $1,150,000 B. debit to Cash for $1,092,500 C. credit to Bonds Payable for $1,092,500 D. credit to Discount on Bonds Payable for $57,500
Answer:
B. debit to Cash for $1,092,500
Explanation:
The journal entry to record the issuance of the bond is shown below:
Cash Dr ($1,150,000 × 95%) $1,092,500
Discount on bond payable $57,500
To Bond payable $1,150,000
(Being the issuance of the bond is recorded)
Here the cash and discount is debited as it increased the assets and discount while the bond payable is credited as it also increased the liabilities
Therefore option B is correct
Why do the marketing, operations, HR management, and IT functions need to be closely coordinated in service organization?
Answer:
Explanation:
All of these needs to be closely coordinated because each department needs the other in order to efficiently fulfill their roles and help the organization grow. Marketing makes sure that a population becomes aware of the organization's products/services but need operations to provide the product. HR management makes sure that all the employees are happy and efficient in order for operations to have the manpower to create the products/services for the organization. Lastly, all of the departments need IT functions in order to receive and input data into the organization's system and communicate with one another.
The amount by which the overhead applied to jobs during a period exceeds the overhead incurred during the period is known as:_____________
a) Predetermined overhead.
b) Overapplied overhead.
c) Estimated overhead.
d) Adjusted overhead.
e) Underapplied overhead.
overapplied overhead
Option B is Correct. The amount by which the overhead applied to jobs during a period exceeds the overhead incurred during the period is known as Overapplied overhead.
Overapplied OverheadOverapplied overhead is the amount that exceeds the estimated overhead amount actually incurred during a production period, hence it is called overapplied.
Overapplied overhead is the amount by which the overhead applied jobs exceeds the overhead incurred, hence the correct option is B.
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The market demand function for corn is Qd = 5 15 - 2P and the market supply function is Qs= 5P- 6, both quantities measured in billions of bushels per year. Suppose the government wants to raise the price to $4 per bushel. What are the aggregate surplus, consumer surplus, and producer surplus at the competitive equilibrium?
Answer:
The Producer surplus = 19.6.
consumer surplus = 12.25.
Aggregate supply = 31.85.
Explanation:
Normally, the demand equilibrium function equals to supply equilibrium function will get us the price which is $3 that is Qd = Qs. Hence, if we equate both function together like;
15 - 2P = 5P - 6.
15 +6 = 5P + 2P.
21 = 7P.
P = $3.
Thus, Qd = 15 - 2P= 15 - 2(3) = 15 - 6 = 9 units.
Qs = 5P - 6 = 5(3) - 6 = 15 - 6 = 9.
Therefore, if the price is going to be Increased by $4, we will have that;
Qd = 15 - 2P= 15 - 2(4) = 15 - 8 = 7 units.
=> The Producer surplus = 1/2 × 14 (4 - 1.2) = 19.6.
=> consumer surplus = 1/2 × 7 (7.5 - 4) = 12.25.
Aggregate supply = Producer surplus + consumer surplus = 19.6 + 12.25 = 31.85.
A stock is expected to pay a dividend of $1 per share in 2 months and in 5 months. The current stock price is $50, and the continuous compounded risk free interest rate is 8% per annum. An investor has just taken a short position in a 6-month forward contract on the stock.
Required:
a. What is the arbitrage free price of the forward contract?
b. What are the forward price and the initial value of the forward contract?
c. Three months later, the price of the stock is $48 and the risk-free rate of interest is still 8% per annum. What are the forward price and the value of the short position in the forward contract?
Answer:
b) the initial value of the forward contract is $0
we must determine the present value of the dividends that the stock is expected to pay in order to determine the forward price:
present value of dividends = ($1 x e⁽⁻⁰°⁰⁸⁾ ⁽⁰°¹⁶⁷⁾) + ($1 x e⁽⁻⁰°⁰⁸⁾ ⁽⁰°⁴¹⁶⁷⁾) = $1.954
forward price = ($50 - $1.954) · e⁽⁰°⁰⁸⁾ ⁽⁰°⁵⁾ = $50.0068 ≈ $50.01
c) again we first determine the present value of the dividends:
present value of dividends = ($1 x e⁽⁻⁰°⁰⁸⁾ ⁽⁰°¹⁶⁷⁾) = $0.9867
forward price = ($48 - $0.9867) · e⁽⁰°⁰⁸⁾ ⁽⁰°²⁵⁾ = $47.963 ≈ $47.96
short forward contract = -[$48 - $0.9867 - ($50.01 · e⁽⁻⁰°⁰⁸⁾ ⁽⁰°²⁵⁾)] = $2.006 ≈ $2.01
a) in order to determine the arbitrage free forward price, the NPV of our forward price must be 0. It is basically the same answer than (b) only that you calculate it in a different order:
$50 = $1.954 + forward price/e⁽⁰°⁰⁸⁾ ⁽⁰°⁵⁾
$48.046 = forward price/(1 + e⁽⁰°⁰⁸⁾ ⁽⁰°⁵⁾
forward price = $48.046 · e⁽⁰°⁰⁸⁾ ⁽⁰°⁵⁾ = $50.006 ≈ $50.01
Paradise Corporation Budgeted on an annual basis for it fiscal year. The following beginning and ending inventory levels (in units) are planned for next year. Beginning Inventory Raw materials 55,000 Finished goods 95,000 Ending inventory raw material 65,000 Finished goods 65,000. Three pounds of raw material are needed to produce each unit of finished product. If Paradise Corporation plans to sell 555,000 units during next year, the number of units it would have to manufacture during the year would be:________. a. 500,000 units b. 555,000 units c. 585,000 units d. 525,000 units.
Answer:
d. 525,000 units.
Explanation:
The computation of the number of units manufactured during the year is shown below:
= Number of units sold + ending finished goods inventory - beginning finished goods inventory
= 555,000 units + 65,000 units - 95,000 units
= 525,000 units
hence, the correct option is d. 525,000 units
We simply applied the above formula so that the correct value could come
And, the same is to be considered
If there is an excess supply of money in the economy, A. there is also an excess demand for money B. there is also an excess demand for bonds C. there is also an excess supply of bonds D. the interest rate will rise E. the Fed must intervene to restore equilibrium
Answer: B. there is also an excess demand for bonds
Explanation:
When there is an excess supply of money in the economy, there is also an excess demand for bonds.
This is because in his case, rather than holding money, individuals will want to increase their being holdings and therefore, this will lead to the reduction in their holding of money. Equilibrium will further be restored as there'll be reduction in interest rate.
In constructing a common-size income statement, depreciation will be______. A. omitted since it is a noncash expense. B. expressed as a percentage of sales. C. added back to convert net income to cash flows. D. expressed as a percentage of total assets. E. expressed as a percentage of gross fixed assets.
Answer:
B. expressed as a percentage of sales.
Explanation:
The common size income statement is the income statement where n each line the item on the income statement should be expressed as a percentage of sales
In the given options, the option B is correct as it shows that the depreciation would be expressed in sales percentage
Therefore all other options are wrong
Talia Corp. produces digital cameras. For each camera produced, direct materials are $20, direct labor is $16, variable manufacturing overhead is $12, fixed manufacturing overhead is $28, variable selling and administrative expenses are $10, and fixed selling and administrative expenses are $24. Compute the target selling price assuming a 40% markup on total per unit cost. Target selling price
Answer:
Talia Corp.
Target Selling Price
= $154
Explanation:
a) Data and Calculations:
Direct materials = $20
Direct labor = 16
Variable manufacturing overhead = 12
Fixed manufacturing overhead = 28
Variable selling & administrative expenses = 10
Fixed selling and administrative expenses = 24
Total cost $110
40% markup on total per unit cost = 44
Target Selling Price = $154
b) Talia bases its target selling price on the addition of 40% of the total cost to the total cost (including manufacturing costs, selling, and administrative expenses).
One effective way to manage credit card debt is to:
A. exaggerate your income when applying for a credit card.
B. spend your entire credit limit before making any payments.
C. replace high-interest credit cards with low-interest options.
D. always pay only the minimum payment required each month.
Answer:
C. replace high-interest credit cards with low-interest options.
Explanation:
A credit card provides a secure and convenient way to pay for goods and services even when they do not have money. The credit card gives the user access to instant credit every time they use it. The user does not incur any charges should they pay the amount due before its due date.
Credit card interest rate charges are among the highest in the industry. If the user is late in their payment, the interest fee and other charges accumulate real quick. Shifting to cards with lower interest is one way of managing credit card debts.
Carla Vista Clinic purchases land for $480000 cash. The clinic assumes $4200 in property taxes due on the land. The title and attorney fees totaled $3200. The clinic had the land graded for $8100. What amount does Carla Vista Clinic record as the cost for the land?A. $476200 B. $470000. C. $484500 D. $478300.
Answer:
$495,500
Explanation:
Carla costs clinic purchases a land for $480,000
The clinic assumes $4,200 in property taxes
The title and attorney fee is $3,200
The land was graded for $8,100
Therefore the cost of the land can be calculated as follows
= $480,000 + $4,200+$3,200 + $8,100
= $495,500
Ramble On Co. wishes to maintain a growth rate of 8 percent a year, a debt-equity ratio of 0.37, and a dividend payout ratio of 54 percent. The ratio of total assets to sales is constant at 1.41. What profit margin must the firm achieve?
Answer: 16.55%
Explanation:
Profit margin is the amount of earnings that a company has left when every expenses and costs have been deducted.
From the information given, firstly, we calculate the return on equity. This will be:
= Growth rate /(1 + Growth rate) × Retention ratio
= 8% / (1 + 8%) × 46%
= 0.08/(1 + 0.08) × 0.46
= 0.08/1.08 × 0.46
= 0.08/0.4968
= 0.1610
= 16.10%
Return on equity, ROE = 16.10%
We then calculate the profit margin. This will be:
= ROE / Asset turnover × Equity Multiplier
where,
Equity Multiplier = 1 + debt-equity ratio
= 1 + 0.37 = 1.37
Profit margin = ROE / Asset turnover × Equity Multiplier
= 16.10% / {(1/1.41) × 1.37}
= 16.10% / 0.71 × 1.37
= 0.1610 / 0.9727
= 0.1655
Profit margin = 16.55%
The profit margin is 16.55%,
Calculation of the profit margin:First we have to determine the return on equity.
So, it should be
= Growth rate /(1 + Growth rate) × Retention ratio
= 8% / (1 + 8%) × 46%
= 0.08/(1 + 0.08) × 0.46
= 0.08/1.08 × 0.46
= 0.08/0.4968
= 0.1610
= 16.10%
Now the profit margin is
= ROE / Asset turnover × Equity Multiplier
= 16.10% / {(1/1.41) × 1.37}
= 16.10% / 0.71 × 1.37
= 0.1610 / 0.9727
= 0.1655
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Tumbling Haven, a gymnastic equipment manufacturer, provided the following information to its accountant. The company had current assets of $145,332, net fixed assets of $356,190, and other assets of $4,176. The firm had long-term debt of $76,445, common stock of $200,000, and retained earnings of $134,461. What amount of current liabilities did this firm have?
a. $94,792
b. $410,906
c. $171,217
d. $76,445
Answer:
a
Explanation:
What is the purpose of the FASFA4CASTER
Luther Industries has no debt, a total equity capitalization of $20 billion, and a beta of 1.8. Included in Luther's assets are $4 billion in cash and risk-free securities. What is Luther's enterprise value?
Answer:
2400000000
Explanation:
Luther's enterprise value will be $16 billion.
The following information can be depicted from the question given:
Total equity capitalization = $20 billionBeta = 1.8It should be noted that an enterprise value is the difference between the market value and cash. Therefore, the enterprise value will be:
= $20 billion - $4 billion
= $16 billion.
In conclusion, Luther's enterprise value will be $16 billion.
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A country has nominal GDP equal to $204.31 billion in 2018. The GDP deflator in 2018 has a value of 112.64. What was the value of real GDP, in billions of dollars. Round to two decimal places. If your answer is 3.2 billion then just enter 3.2.
Answer:
$181.38 billion
Explanation:
The computation of the value of the real GDP is shown below:
As we know that
Real GDP = (Nominal GDP ÷ GDP Deflator) × 100
= ($204.31 billion ÷ 112.64) × 100
= $181.38 billion
Hence, the value of real GDP is $181.38 billion
We simply applied the above formula so that the correct value could come
And, the same is to be considered
Tommy is about to order a steak dinner with a salad at his favorite restaurant. The restaurant recently raised its prices on steaks but kept its prices on salads the same. How might the real-income effect and the substitution effect influence Tommy’s order?
Answer:
Explanation:
Each of these effects would most likely influence Tommy's order differently. The real-income effect would most likely cause Tommy to buy the large steak and salad regardless of the increase in price since individuals tend to spend more when they start making more money. The substitution effect on the other hand would most likely cause Tommy to order a smaller steak since it costs more but at the same time order, more salad since the price has not increased as the steak did.
What is the value of $1000 investment that loses 5% each year for eight years
Answer:
$663.420
Explanation:
The value for the investment is the future of $1000, earning a compound interest of -5% for eight years.
The formula for compound interest is as below.
FV = PV × (1+r)^n
Fv = $1000 x ( 1 + (-5/100)^8
Fv= $1000 x (1 +(-0.05)^8
FV= $1000 x (0.95)^8
Fv=$1000x 0.6634204
Fv=$663.420
The value will be $663.42
Answer:
663.42
Explanation:
Trust me and him ^
Please help me guysss ASAP the question is in the photo. I need to submit it. I'll give brainliest.
Answer:
f to b is right
Explanation:
.............
Barney, a manager, is very conventional, resistant to change, habitual, and does not accept new ideas very easily.This implies that Barney has:________.
A) low neuroticism.
B) low customary thinking.
C) high extraversion.
D) high agreeableness.
E) low openness to experience.
Answer:
A
Explanation:
Pillar Company owns 70 percent of Salt Company's outstanding common stock. On December 31, 20x8, Salt sold equipment to Pillar at a price in excess of Salt's carrying amount but less than its original cost. On a consolidated balance sheet at December 31,20x8, the carrying amount of the equipment should be reported at:_______________ A) Pillar's original cost. B) Salt's original cost. C) Pillar's original cost less Salt's recorded gain. D) Pillar's original cost less 70 percent of Salt's recorded gain.
Answer:
C. Pillar's original cost less Salt's recorded gain
Explanation:
For physical assets, that is in the form of machineries or computer hardware or in this case, equipment, we can calculate the carrying cost to be the original cost minus accumulated depreciation.
in answer to this question, the carrying amount of the equipment should be reported at Pillar's original cost less Salt's recorded gain.
The following transactions were selected from among those completed by Hailey Retailers in the current year:
Nov. 20 Sold two items of merchandise to Customer B, who charged the $460 (total) sales price on her Visa credit card. Visa charges Hailey a 1 percent credit card fee.
25 Sold 14 items of merchandise to Customer C at an invoice price of $3,400 (total); terms 2/10, n/30.
28 Sold 12 identical items of merchandise to Customer D at an invoice price of $8,040 (total); terms 2/10, n/30.
30 Customer D returned one of the items purchased on the 28th; the item was defective and credit was given to the customer.
Dec. 06 Customer D paid the account balance in full.
30 Customer C paid in full for the invoice of November 25.
Required:
a. Prepare the appropriate journal entry for each of these transactions. Do not record cost of goods sold.
b. Compute Net Sales.
Answer:
Hailey Retailers
a. Journal Entries:
Nov. 20:
Debit Visa Card $455.40
Debit Card Charges $4.60
Credit Sales Revenue $460
To record the sale of goods via Visa credit card.
Nov. 25:
Debit Accounts Receivable $3,400
Credit Sales Revenue $3,400
To record the sale of goods on account, terms 2/10, n/30.
Nov. 28:
Debit Accounts Receivable $8,040
Credit Sales Revenue $8,040
To record the sale of goods on account, terms 2/10, n/30.
Nov. 30:
Debit Sales Returns $670
Credit Accounts Receivable $670
To record the return of the defective items.
Dec. 06:
Debit Cash $7,222.60
Debit Cash Discount $147.40
Credit Accounts Receivable $7,370
To record the receipt from Customer D.
Dec. 30:
Debit Cash $3,400
Credit Accounts Receivable $3,400
To record the receipt from Customer C.
b. Computation of the Net Sales:
Nov. 20: Sales Revenue $460
Nov. 25: Sales Revenue $3,400
Nov. 28: Sales Revenue $8,040
Nov. 30: Sales Returns $(670)
Net Sales = $11,230
Explanation:
Hailey Retailers' net sales equals the addition of the sales revenue minus the sales returns.
A company had inventory on July 1 of 5 units at a cost of $16 each. On July 2, they purchased 9 units at $28 each. On July 6 they purchased 5 units at $25 each. On July 8, 8 units were sold for $58 each. Using the LIFO periodic inventory method, what was the value of the inventory on July 8 after the sale?
Answer:
$248
Explanation:
The LIFO inventory method implies that the inventory that was purchased last would be the first to be sold.
Here, we would compute the inventory units as seen below;
= 5 units + 9 units + 5 units - 8 units
= 11 units
Now, the value of inventory is;
= 5 units × $16 + 6 units × $28
= $80 + $168
= $248.
The 6 units come from
= 11 units - 5 units
= 6 units.
Therefore, the value of inventory is $248.
The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a perfectly competitive firm that produces novelty ear buds in a competitive market. The market price of ear buds is $6.00 per pair. Buddies Production CostsQuantity of Ear Buds MC ATC ($) ($)5 - 80 2 515 2.45 4.1520 3.55 425 4 430 5.5 4.2535 6 4.540 8.5 5A. If Buddies wants to maximize its profits, how many pairs of ear buds should it produce?B. At the profit-maximizing quantity, what is the total cost of producing ear buds?C. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit?D. If the market price is $5.50 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit?E. Buddies earns a normal profit whena. marginal cost equals average cost at the minimum of average cost.b. marginal cost equals average cost.c. marginal cost equals marginal revenue at the minimum of marginal cost.d. average cost equals average revenue at the minimum of average cost.
Answer and Explanation:
The computation is shown below:
a. The number of pairs of ear buds that should be produced for maximizing the profits is
As we know that
MR = MC
Q = 35
And also the price is equal to the MC
Hence, the quantity that should be produced would be 35
b). The total cost of producing ear buds for maximizing the profit is
As we know that
TC = ATC × Q
= 4.5 × 35
= $157.5
c. The weekly profit is
As we know that
Profit = TR - TC
= (P - ATC) × Q
= (6 - 4.5) × 35
= $52.5
d) The weekly profit is
Profit= (5.5 - 4.25) × 30
= $37.5
e. The normal profit could be earned at the time when the marginal cost is equivalent to the average cost that contains the minimum
Hence, the option a is correct
A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $75 per unit (100 bottles), including fixed costs of $28 per unit. A proposal is offered to purchase small bottles from an outside source for $40 per unit, plus $4 per unit for freight.
a. Prepare a differential analysis dated July 31 to determine whether the company should make _______ or buy __________ the bottles, assuming fixed costs are unaffected by the decision.
b. Determine whether the company should make ___________ or buy ________ the bottles.
Answer:
Part a
Differential analysis to determine whether the company should make or buy the bottles.
Make Buy
Variable manufacturing costs ($75 - $28) $47
Purchase price $40
Freight charges $4
Total Cost $47 $44
Part b
The Company should Buy instead of making the bottles. This is because it costs $3 more to make the bottles than buying them.
Explanation:
The make or buy decision should be done by considering relevant costs. The fixed costs are irrelevant in this decision hence, we have to ignore them.
The alternative course which gives the lowest cost is the one to go for. This will minimize the costs for the entire business and in turn maximizes the profits of the company.