Answer and Explanation:
The journal entries are shown below:
On December 31
Bad debt expense Dr $5,232 ($654,000 × 0.80%)
To Allowance for doubtful debts $5,232
(To record the bad debt expense)
On Feb 01
Allowance for doubtful debts Dr $327
To Account receivable $327
(To record the uncollectible amount)
On June 5
Account receivable $327
To Allowance for doubtful debts Dr $327
(To record the uncollectible amount)
On June 5
Cash Dr $327
To Account receivable $327
(To record the cash received)
Identify the impact on either the supply or demand of loanable funds following the events listed below. Economic conditions deteriorate, prompting households to save a larger portion of their income. will In an effort to balance the budget, the government increases taxes paid by businesses. will Economic conditions improve, increasing the demand for goods and services. will Innovations in robotics technology vastly improves productivity within manufacturing firms. will
Answer:
1. Economic conditions deteriorate, prompting households to save a larger portion of their income. SUPPLY will INCREASE.
Loanable funds are created by financial institutions from the savings that households deposit in them. If households start saving more, the amount of loanable funds created will be more which means an increase in supply.
2. In an effort to balance the budget, the government increases taxes paid by businesses. DEMAND will DECREASE.
Businesses comprise a large portion of the market demanding loanable funds. If their taxes increase, they will reduce the loanable funds they get which they use for investment because they will not see the need of investing more if their profitability will suffer from taxation.
3. Economic conditions improve, increasing the demand for goods and services. DEMAND will INCREASE.
With goods and services in high demand, businesses will seek more loanable funds to expand their capacity and produce more goods and services.
4. Innovations in robotics technology vastly improves productivity within manufacturing firms. DEMAND will INCREASE.
Demand for loanable funds will increase as businesses invest in the innovations to take advantage of the improved productivity offered by them.
The impact of the demand and supply in the given situations would be as follows:
1). Increase in Supply
2). Decrease in Demand
3). Increase in Demand
4). Increase in Demand
Demand and Supply
Demand and Supply are affected by various factors including price, income, and many others.
The fall in the economic conditions and people promoting savings would cause an increase in supply because the demand would decrease due to emphasis on savings.
The increased taxation would cause the purchasing power of the people to fall and thus, the demand would decrease.
The improvement in economic conditions implies more purchasing powers and hence, the demand will increase.
The enhanced productivity increases employment and hence, more will be demanded.
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This company purchased a truck at a cost of $12,000. The truck has an estimated residual value of $2,000 and an estimated life of 5 years, or 100,000 hours of operation. The truck was purchased on January 1, 2012, and was used 27,000 hours in 2012 and 26,000 hours in 2013. Refer to Fabian Woodworks. If the company uses the units-of-production method, what is the depreciation rate per hour for the equipment
Answer:
The correct answer is $0.10 per hour
Explanation:
According to the scenario, the calculation of the depreciation rate per hour using the units-of-production method is as follows
= (Purchase cost - estimated residual value) ÷ (estimated hours of operation)
= ($12,000 - $2,000) ÷ (100,000 hours)
= ($10,000) ÷ (100,000 hours)
= $0.10
hence, the depreciation rate per hour for the equipment is $0.10
Ivanhoe purchased a patent from Vania Co. for $1,240,000 on January 1, 2018. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2028. During 2020, Ivanhoe determined that the economic benefits of the patent would not last longer than 6 years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2020
Answer: $744,000
Explanation:
The amount that should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2020 will be:
First, we have to calculate the amortization recorded up to 2019. This will be:
= (1,240,000 / 10) x 2
= 248,000
The we calculate the amortization to be recognized in 2020. This will be:
= (1,240,000 – 248,000) / 4
= 248,000
The amount that should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2020 will be:
= 1240000 - 248000 - 248000
= $744,000
On January 1, two years ago, Parkway Corporation purchased all of the outstanding common stock of Shaw Company for $220,000 cash. On that date, Shaw's net assets had a book value of $148,000. Equipment with an 8-year life was undervalued by $20,000 in Shaw's financial records. Shaw has a database that is valued at $52,000 and will be amortized over ten years. Shaw reported net income of $25,000 in the year of acquisition and $32,500 in the following year. Dividends of $2,500 were declared and paid in each of those two years.
The third year of operations is now complete. For each of the two companies, selected account balances as of December 31 for this third year are as follows: Park way ShawRevenues 250,000 142,500Expenses 175,000 100,000 Equipment 125,000 60,000 Retained earnings, begining of the year 150,000 75,000Dividend paid 25,000 5,000What is consolidated net income for the third year of operations if the parent company uses the partial equity method?
A) $109,800
B) $112,000
C) $115,000
D) $117,500
E) $113,500
Answer:
A) $109,800
Explanation:
The computation of the consolidated net income using the partial equity method is as follows;
= Park way revenue + Shaw revenue - part way expenses - shaw expenses - dividend declared - amortization expenses
= $25,0000 + $142,500 - $175,000 - $100,000 - $2,500 - ($52,000 ÷ 10 years)
= $109,800
Hence, the correct option is A.
Using your accounting knowledge, fill in the following separate income statements a through e. Identify any negative amount by putting it in parentheses.
Statements:
a b c d e
Sales $100,000 $805,000 $2,000 $450,000 $100,000
Cost of goods sold
Merchandise inventory (beginning) $10,000 $0 $100 $80,000 $25,000
Total Cost of merchandise purchases $30,000 $300,000 $0 $100,000 $10,000
Merchandise inventory (ending) ($10,000) $10,000 ($10) ($50,000) ($10,000)
Cost of goods sold $30,000 $290,000 $90 $130,000 $25,000
Gross Profit $70,000 $515,000 $1,910 $320,000 $75,000
Expenses $10,000 $150,000 $1,000 $400,000 $50,000
Net Income (loss) $60,000 $365,000 $910 ($80,000) $25,000
Answer:
Income Statements a b c d e
Sales $100,000 $805,000 $2,000 $450,000 $100,000
Cost of goods sold ($30,000) ($290,000) ($90) ($130,000) ($25,000)
Gross Profit $70,000 $515,000 $1,910 $320,000 $75,000
Expenses ($10,000) ($150,000) ($1,000) ($400,000) ($50,000)
Net Income (loss) $60,000 $365,000 $910 ($80,000) $25,000
Explanation:
a) Data and Calculations:
Income Statements a b c d e
Sales $100,000 $805,000 $2,000 $450,000 $100,000
Cost of goods sold
Merchandise inventory
(beginning) $10,000 $0 $100 $80,000 $25,000
Purchases $30,000 $300,000 $0 $100,000 $10,000
inventory (ending) ($10,000) ($10,000) ($10) ($50,000) ($10,000)
Cost of goods sold $30,000 $290,000 $90 $130,000 $25,000
Gross Profit $70,000 $515,000 $1,910 $320,000 $75,000
Expenses $10,000 $150,000 $1,000 $400,000 $50,000
Net Income (loss) $60,000 $365,000 $910 ($80,000) $25,000
What are the step(s) when using the Sales with Payment customer
workflow?
Answer:
Option (d) is correct
Explanation:
Create Invoice > Receive Payment deposited to the Undeposited Funds account > Create Bank Deposit.
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A payroll tax is collected by which of the following methods?
A.
It is automatically deducted as a percentage of the paycheck.
B.
The paycheck is brought to the bank for the tax to be deducted.
C.
The payroll tax is paid with the income tax on April 15 of each year.
D.
The government deducts a percentage of your paycheck directly from your personal bank account.
Please select the best answer from the choices provided
A
B
C
D
Answer:
A.
It is automatically deducted as a percentage of the paycheck.
Explanation:
just did it on the exam
Ivanhoe Corporation, a manufacturer of Mexican foods, contracted in 2020 to purchase 1000 pounds of a spice mixture at $4.00 per pound, delivery to be made in spring of 2021. By 12/31/20, the price per pound of the spice mixture had dropped to $3.70 per pound. In 2020, Ivanhoe should recognize:______________
LAnswer:
Loss of $300
Explanation:
Calculation for the what Ivanhoe should recognize in 2020
2020 Recognized Amount=(1,000 pound*$4.00 per pound)-(1,000 pound*$3.70 per pound)
2020 Recognized Amount=4,000 pound-3,700 pound
2020 Recognized Amount=300 pound
Therefore what Ivanhoe should recognize in 2020 is LOSS of 300 pound
3. Hayden Company currently sells widgets for $160 per unit. The variable cost is $60 per unit and total fixed costs equal $240,000 per year. Sales are currently 40,000 units annually, and the income tax rate is 40 percent. Required: a. Calculate the contribution margin per unit.
Answer:
The contribution margin per unit is $100
Explanation:
The computation of the contribution margin per unit is shown below:
The Contribution margin per unit is
= Selling price per unit - variable cost per unit
= $160 - $60
= $100
hence, the contribution margin per unit is $100
We simply applied the above formula so that the correct value could come
And, the same is to be considered
A company had a beginning balance in retained earnings of $43,300. It had net income of $6,300 and declared and paid cash dividends of $5,700 in the current period. The ending balance in retained earnings equals:
After the introductory period, all consumers who have this Platinum Card will...
Answer:
Qualify for an A.P.R. based on their creditworthiness
Explanation:
After the introductory period is over you will be set a new APR
Financial services Consumers, who have Platinum Card after some introductory period, qualify for APR (Annual Percentage Rates).
The qualification for APR depends on the customer's creditworthiness. This is the assessed financial ability of a customer to pay on her credit terms. If the credit performance of the customer is adjudged worthy, the cardholder may be given a Titanium card with a higher credit limit.When a credit card account is opened for a customer, the customer is charged with the introductory rate. Then, after the introductory period, the customers are charged with the APR, which is usually less than the introductory rate.Credit card account holders may also attract penalty APR when the penalty terms are triggered. Some credit card accounts attract variable APR, which means that the rate changes depending on stated circumstances.Thus, the rate charged at the introductory period of a Platinum Card is higher than the APR.
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Dukelow Corporation has two divisions: the Governmental Products Division and the Export Products Division. The Governmental Products Division's divisional segment margin is $41,300 and the Export Products Division's divisional segment margin is $93,700. The total amount of common fixed expenses not traceable to the individual divisions is $106,800. What is the company's net operating income (loss)?
a) $241,800
b) $135,000
c) $28,200
d) $135,000
Answer:
c) $28,200
Explanation:
Calculation for What is the company's net operating income (loss)
Governmental products division's divisional margin segment $41,300
Add Export Products Division's divisional segment margin $93,700
Total divisional segment margin $135,000
($41,300+$93,700)
Less Common fixed expenses not traceable to the individual divisions ($106,800)
Company's net operating income $28,200
($135,000-$106,800)
Therefore the company's net operating income is $28,200
Zycon has produced 10,000 units of partially finished Product A. These units cost $15,000 to produce, and they can be sold to another manufacturer for $20,000. Instead, Zycon can process the units further and produce finished Products X, Y, and Z. Processing further will cost an additional $22,000 and will yield total revenues of $35,000. Identify whether the item is relevant or irrelevant to the sell or process further decision.
Answer:
Cost relevant or irrelevant for decision making to sell or process further
a. $15,000 already incurred is not relevant because this is sunk cost. This cannot be avoided or changed.
b. $20,000 selling price is relevant for decision making because this incremental revenue is generated if goods are sold semi-finished.
c. $22,000 additional selling price is for decision making because this cost is required for further processing and shall be incurred.
d. $35,000 revenue from processing is relevant for decision making because this incremental revenue is generated if goods are after further processing.
Peter has just paid $100 for a comic book, not because he thinks it is worth $100 or because he likes comic books, but because he thinks he can sell it for $200 next month. Peter is:
Answer:
investing
Explanation:
buying somthing to sell later because of the profit
koshys coffe in bagalore is quaint establishment nesteld near mg road in the central business distirct it serves coffee and fruit cake to a clientel that has been enjoying these products for over fifty years the demand for coffee beans is 6600 cases per year each case has 24 ten pound bags it would be distraus fro them to run out of coffe so tye keep a safety stock of 30 cases the cases cost 4800 and it costs 5 per case to order coffee. as coffee is perishable prudct the holding ocst is fairly hight 40/case/year the lead time to recive an order is seven days koshys is open 300 days a year.
What is their annual ordering cost if they order at their EOQ level?
Answer:
812.41
Explanation:
Demand D = 6600 cases
Ordering cost S = 5
Holding cost H= $40
Economic order quantity = EOQ
Q = [tex]\sqrt{2DS/H}[/tex]
Q = [tex]\sqrt{(2*6600*5)/40}[/tex]
Q = [tex]\sqrt{1650}[/tex]
Q = 40.620192
Q = 40.62 cases
Annual ordering cost = D * S / EDQ
Annual ordering cost = 6600 * 5 / 40.62
Annual ordering cost = 33000 / 40.62
Annual ordering cost = 812.4076809453471
Annual ordering cost = $812.41
So, their annual ordering cost if they order at their EOQ level is 812.41
ABC Company has completed the basic format to be used in preparing the statement of cash flows (indirect method). Listed below in random order are line items to be included in the statement of cash flows.
Purchase of equipment $2,210
Decrease in inventory 253
Increase in prepaid rent 75
Payment of dividends 360
Depreciation expense 184
Increase in accounts receivable 530
Increase in accounts payable 160
Gain on sale of land 136
Net income 1,878
Repayment of notes payable 493
Cash received from the sale of land 67
Issuance of common stock 2,440
Required:
1. What is the net cash provided by operating activities?
a. $926 Inflow.
b. $1,198 Inflow.
c. $420 Inflow.
d. $324 Inflow.
2. What is the net cash provided by Investing activities?
a. $2,143 outflow.
b. $2,279 outflow.
c. $1,959 outflow.
d. $2,095 outflow.
3. What is the net cash flow by financing activities?
a. $1,587 Inflow.
b. $1.947 Inflow.
c. $2,080 Inflow.
d. $2,440 Inflow.
Answer:
1. b. $1,198 Inflow
2. a. $2,143 outflow
3. a. $1,587 Inflow.
Explanation:
Determination of net cash provided by operating activities
$
Cash flow from Operating Activities
Net income 1,878
Adjust for :
Depreciation expense 184
Decrease in inventory 253
Increase in prepaid rent (75)
Increase in accounts receivable (530)
Increase in accounts payable 160
Gain on sale of land (136)
Net cash provided by operating activities 1,734
Determination of net cash provided by Investing activities
$
Cash flow from Investing Activities
Purchase of equipment (2,210)
Cash received from the sale of land 67
Net cash provided by Investing activities (2,143)
Determination of net cash flow by financing activities
$
Cash flow from Financing Activities
Payment of dividends (360)
Issuance of common stock 2,440
Repayment of notes payable (493)
Net cash flow by financing activities 1,587
Portions of the financial statements for Peach Computer are provided below.
PEACH COMPUTER
Income Statement
For the year ended December 31, 2021
Net sales $1,925,000
Expenses:
Cost of goods $1,100,000
sold
Operating expenses 610,000
Depreciation expense 55,000
Income tax expense 45,000
Total expenses 1,810,000
Net income $ 115,000
PEACH COMPUTER
Selected Balance Sheet Data
December 31
Increase (I) or Decrease
2021 2020 (D)
Cash $107,000 $87,500 $19,500 (I)
Accounts receivable 45,500 51,500 6,000 (D)
Inventory 80,000 57,500 22,500 (I)
Prepaid rent 3,500 6,000 2,500 (D)
Accounts payable 50,000 39,500 10,500 (I)
Income tax 5,500 12,500 7,000 (D)
Required: Prepare the operating activities section of the statement of cash flows for Peach Computer using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)
Answer:
Cash flow from Operating Activities
Net income 115,000
Add Depreciation 55,000
Add Income tax 45,000
Decrease in Accounts receivable 6,000
Increase in Inventory (22,500)
Decrease in Prepaid rent 2,500
Increase in Accounts payable 10,500
Cash Generated from Operations 211,500
Income tax paid (38,000)
Net Cash from Operating Activities 173,500
Explanation :
The operating activities section of the statement of cash flows shows the Cashflow results from the Operating or Normal trading business of the organization.
Select the correct answer.
Information security professionals hack into computer systems.
A True
B. False
Answer:
true
Explanation:
Answer:
false
Explanation:
Suppose your company needs $43 million to build a new assembly line. Your target debt-equity ratio is .65. The flotation cost for new equity is 6 percent and the flotation cost for debt is 2 percent. Your boss has decided to fund the project by borrowing money because the flotation costs are lower and the needed funds are relatively small. a. What do you think about the rationale behind borrowing the entire amount?
Answer: See explanation
Explanation:
Debt = 0.65
Weight = 39.39%
Cost for debt = 2%
Product = 39.39% × 2%
= 0.3939 × 0.02
= 0.007878
Equity = 1.00
Weight = 60.61%
Cost for equity = 6%
Product = 60.61% × 6%
= 0.6061 × 0.06
= 0.036366
Weighted average floatation cost:
= 0.007878 + 0.036366
= 0.044244
= 4.42%
The true cost of the building will then be:
= Funds needed / (1 - Floatation cost)
= $43,000,000 / (1 - 0.044244)
= $43,000,000 / 0.955756
= $44,990,562
ABC Inc.'s capital structure is 40% debt, 15% preferred, and 45% common equity, and its tax rate is 40%. For financing, (a) ABC sold a non-callable bond several years ago that now has 15 years to maturity with 8% annual coupon, paid semiannually, at a price of $1,065, and a par value of $1,000. (b) ABC sold a perpetual preferred stock for $95.50 per share, with a $7.50 annual dividend and a flotation cost of 3.00% of the price. (c) ABC also has beta
Answer:
The answer is B (im pretty sure)
Hope this helps plz consider marking brainliest
Explanation:
The journal entry to record the use of utilities in a factory could include which two of the following: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)
Debit to Factory Overhead
Credit to Factory Overhead
Debit to Factory Utilities Payable
Credit to Factory Utilities Payable
Credit to Raw Materials
Credit to Factory Wages Payable
Answer:
Debit to Factory Overhead
Credit to Factory Utilities Payable
Explanation:
The journal entry to record the use of utilities in a factory is as follows:
Factory overhead Dr XXXXX
To Factory utilities payable XXXXX
(Being the utilities usage is recorded)
Here the factory overhead is debited as it increased the expenses and credited the factory utilities payable as it also increased the liabilities
So, the above represent the answer
On January 1, 2019, Sandhill Corporation acquired machinery at a cost of $1290000. Sandhill adopted the double-declining balance method of depreciation for this machinery and had been recording depreciation over an estimated useful life of ten years, with no residual value. At the beginning of 2022, a decision was made to change to the straight-line method of depreciation for the machinery. The depreciation expense for 2022 would be
Answer:
$94,354.29
Explanation:
Depreciation rate = 100/10*2 = 20%
2019 Depreciation = 1290000 * 20% = $258000
2020 Depreciation = 1290000 * 80% * 20% = $206400
2021 Depreciation = 1290000 * 80% * 80% * 20% = $165120
Accumulated depreciation (2019 to 2021) = $258000 + $206400 + $165120 = $629,520
Depreciation expense for 2022 = (1290000 - 629,520) / 7
Depreciation expense for 2022 = 660480 / 7
Depreciation expense for 2022 = $94,354.29
who want to do 1v1 lol with me
Answer:
nnm,v xcmnm,bkljmbihutjhuF
Explanation:
8-4 Valuing Commercial Real Estate BuildingOne Properties is a limited partnership formed with the express purpose of investing in commercial real estate. The firm is currently considering the acquisition of an office building that we refer to simply as building B. Building B is very similar to building A, which recently sold for $36,960,000. BuildingOne has gathered general information about the two buildings, including valuation information for building A:
Answer:
the question is incomplete:
Buildings A and B are similar in size (80,000 and 90,000 square feet, respectively). However, the two buildings differ both in maintenance costs ($23 and $30 per square foot) and rental rates ($100 versus $120 per square foot). At this point, we do not know why these differences exist. Nonetheless, the differences are real and should somehow be accounted for in the analysis of the value of building B using data based on the sale of building A. Building A sold for $462 per square foot, or $36,960,000. This reflects a sales multiple of six times the building’s net operating income (NOI) of $6,160,000 per year and a capitalization rate of 16.67%.
NOI of building A = ($100 x 80,000 ft²) - ($23 x 80,000 ft²) = $6,160,000
NOI of building B = ($120 x 90,000 ft²) - ($30 x 90,000 ft²) = $8,100,000
building B's market value = NOI / capitalization rate = $8,100,000 / 0.1667 = $48,600,000
property value = $48,600,000 / 90,000 ft² = $540 per ft²
Jeff and Riley were married for 35 years when Riley died in July of 2016. The couple have two children who are 6 and 10 years old. Which of the following applies to Jeff regarding filing status?a) Jeff can file using any status he wants for the next 3 yearsb) Since Jeff’s spouse died during the year, he may be entitled to the special qualifying widower with dependent child benefits for tax year 2017 and 2018c) Since Jeff’s spouse died during the year, he may be entitled to the special qualifying widower with dependent child benefits for tax year 2016 onlyd) Since Jeff’s spouse died during the year, he may be entitled to the special qualifying widower with dependent child benefits for tax year 2017 only
Answer:
(D) I think
Explanation:
When your husband or spouse dies,you file as a widower. If he has children he could get extra benefits because he can file his kids as a Dependent on his Taxes.
Hope this helps:)!
Stay beautiful ❤️
With Riley having died in 2016, the procedure would be that b) Since Jeff’s spouse died during the year, he may be entitled to the special qualifying widower with dependent child benefits for tax year 2017 and 2018.
Special Qualifying WidowerAllows a widower to still fill taxes jointly as a married person for two years after the spouse dies. Can only apply if there is at least a single dependent child.There are two dependent children in this scenario so Jeff qualifies for this filling status. As Riley died in 2016, Jeff's two years would be the years 2017 and 2018.
In conclusion, option B is correct.
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Dan Pink argues that for 21st century tasks in creative businesses the mechanistic, reward-and-punishment approach will not work best because creativity is often constrained when immediate monetary rewards are offered in return for success. a. Trueb. False
Answer: True
Explanation:
This statement is true. Dan Pink argued that when it came to creative businesses, it would be best to use intrinsic as opposed to extrinsic rewards to encourage employees as extrinsic rewards such as money could constrain creativity.
Intrinsic rewards are those that are psychologically rewarding such as giving employees tasks that are fulfilling and make them feel part of the team as well as positive feedback from employers.
A falling price level is a symptom of an unhealthy economy, if prices have fallen due to _________. It is symptom of a healthy economy if prices have fallen due to _________
Answer:
A decrease in the demand for goods and services; an increase in the supply of goods and services.
Explanation:
In the case of the unhealthy economy, if the price is fall so it is because of reduction in the demand of the products and services while on the other hand if there is a healthy economy and now the price is fallen so it is because of the supply of the goods and services are rised up.
Therefore the last option is correct
And, the rest of the options are incorrect
During March 2019, Alaska Corporation recorded $266,000 of costs related to factory overhead. Alaska's overhead application rate is based on direct labor hours. The preset formula for overhead application estimated that $250,000 would be incurred, and 12,500 direct labor hours would be worked. During March, 12,500 hours were actually worked. Use this information to determine the amount of overhead over or under applied. Enter overapplied overhead as a negative number. (round
Answer:
Underapplied overhead= $16,000
Explanation:
Because the estimated and real direct labor hours are the same, the estimated overhead equals the allocated overhead.
Allocated overhead= $250,000
Actual overhead costs= $266,000
To calculate the over/under allocation, we need to use the following formula:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 266,000 - 250,000
Underapplied overhead= $16,000
Corporation produces shiny discs. A special order has been placed by the customer for 2,200 units of the shiny disc for $27 a unit. While the disc would be modified slightly for the special order, the normal unit product cost for each disc is $20.50:
Direct materials $ 5.80
Direct labor 4.00
Variable manufacturing overhead 2.90
Fixed manufacturing overhead 7.80
Unit product cost $ 20.50
Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs.The customer would like modifications made to each disc that would increase the variable costs by $1.90 per unit and that would require an investment of $16,000 in special equipment that would have no salvage value.This special order would have no effect on Rick Corp.'s other sales. The company has enough spare capacity for producing the special order.What would be the annual financial advantage (disadvantage) for Rick as a result of accepting this special order?a. $40,760b. ($15,700)c. ($2,000)d. $16,200
Answer:
Effect on income= $11,280 increase
Explanation:
Giving the following information:
A special order has been placed by the customer for 2,200 units of the shiny disc for $27 a unit.
Because it is a special order, we will take into account only the differential fixed costs.
First, we need to calculate the total unitary cost and differential fixed costs:
Total unitary variable cost= 5.80 + 4 + 2.9 + 1.9
Total unitary variable cost= $14.6
Total fixed cost= $16,000
Now, we can determine the effect on income:
Effect on income= 2,200*(27 - 14.6) - 16,000
Effect on income= $11,280 increase
Assume that Clark Electronics has a monopoly in the production and sale of a new device for detecting and destroying a computer virus. Clark Electronics currently incurs short-run losses, but it continues to operate.
a. What must be true for Clark to continue to operate in the short run?
b. Draw a correctly labeled graph, and show each of the following for Clark.
i. The profit-maximizing price and output
ii. Area of loss
C. Assume Clark is maximizing profit. What will happen to its total revenue if Clark raises its price? Explain.
d. If demand for the new device increases, explain what will happen to each of the following in the short run.
i. Profit-maximizing output
ii. Total cost
Solution :
c. MC=MR is the profit maximizing equilibrium point. The price rise beyond that is likely to raise the total revenue. But the total cost might increase equally or more then that to nullify or decrease the profit.
d. (i). The demand increase implies that the AR (demand) curve shifts rightwards. This will increase the equilibrium price.
(ii). Change in demand does not affect the total cost.
a. Monopoly might continue to produce in short earn even if its AR < AC. It continues to do so until shut down point. It refers that production continued until average revenue (AR) is greater than equal to the average variable cost (AVC). The monopoly is a market with a single seller.
This market's average revenue (AR) demand curve is above its marginal curve . The curves are downward sloping, illustrating price demand inverse relationship.
Equilibrium quantity : when the marginal revenue = marginal cost
Equilibrium price : equilibrium quantity corresponding price at AR (demand ) curve.