QUESTION 6: If variable costs are $10 per dozen, what is the new volume required to earn the same total contribution as before the price decrease?…
Technically, the new contract reduces profit of the company by $3,980. By itself, this one-year contract appears not to be worth the effort of hiring and training new, part-time consultants.…
Profit = Income - Cost = 180x - 126x - 540000 = 54x - 540000…
2. For each expense that is variable with respect to revenue hours, calculate the cost per revenue hour. Jan 1,546 7,896 9,442 329 28.70 0.03 Feb 1,485 7,584 9,069 316 28.70 0.03 Mar 1,697 8,664 10,361 361 28.70 (costs/hours) 0.03 (hours/costs)…
The loss and revenue are identifies on the individual firm graph. Total cost is equal to the sum of the losses and revenue. The decision about whether this firm shuts down or remains in the market depends on the postion of the average variable cost.…
3 The computer equipment is a fixed cost due to the fact that normally they were purchased before starts the business and so they are independent from the revenue.…
As shown in the Excel Worksheet (Question #1), the best course of action following a competitors price decrease is to not change prices. I reduction in price by 10% leads to a subsequent reduction in Margins by 25%, but this is only offset by an increase in sales of 20%. As a result, holding prices constant sees a Total Margin of 32,000,000 which is preferable to the 30,000,000 Total Margin that a price reduction would see.…
New Contribution Margin = New Price per unit – Variable cost per unit =$8.5-$2.5 =$6…
Question: 1. What share does Jones Blair have of the rural household market segment? Rural professional market?…
A pencil manufacturer is in a perfectly competitive market. The firm can sell as much as it wants at a price of $1.50 per pencil. At some production levels, its average variable costs are less than $1.50, but there is not production level where its average total cost is equal or less than $1.50. What would be your recommendation to the pencil manufacturer?…
1. Direct material costs are generally variable costs. True False 2. Property taxes and insurance premiums paid on a factory building are examples of manufacturing overhead. True False 3. Manufacturing overhead combined with direct materials is known as conversion cost. True False 4. All costs incurred in a merchandising firm are considered to be period costs. True False 5. Depreciation is always considered a product cost for external financial reporting purposes in a manufacturing firm. True False 6. In external financial reports, factory utilities costs may be included in an asset account on the balance sheet at the end of the period. True False 7. Advertising costs are considered product costs for external financial reports because they are incurred in order to promote specific products. True False 8. Selling and administrative expenses are product costs under generally accepted accounting principles. True False 9. A variable cost is a cost whose cost per unit varies as the activity level rises and falls. True False 10. When the level of activity increases, total variable cost will increase. True False 11. A decrease in production will ordinarily result in an increase in fixed production costs per unit. True False 12. Automation results in a shift away from variable costs toward more fixed costs. True False 13. In order for a cost to be variable it must vary with either units produced or units sold. True False 14. The concept of the relevant range does not apply to fixed costs. True False 15. Indirect costs, such as manufacturing overhead, are always fixed costs. True False 16. Discretionary fixed costs arise from annual decisions by management to spend in certain fixed cost areas. True False 17. Even if operations are interrupted or cut back, committed fixed costs remain largely unchanged in the short term because the costs of restoring them…
8) Assume the price of a product sold by a purely competitive firm is $5. Given the data in the accompanying table (bottom left), at what output is the total profit highest in the short run?…