Airlines seek new ways to save on fuel as costs soar

Fuel is an​ airline's biggest single expense. In​ 2008, the cost of jet fuel rocketed. Airlines tried to switch to newer generation​ aircraft, which have more​ fuel-efficient engines.  

​Source:

The

New York

Times​,

June​ 11, 2008

Explain how an increase in the price of fuel changes an​ airline's total​ costs, average​ costs, and marginal cost.

When the cost of fuel​ increases, total fixed cost​ _______ and total variable cost​ _______.  

A.

​increases; increases

B.

​decreases; increases

C.

​increases; does not change

D.

does not​ change; increases

When the cost of fuel​ increases, total cost​ _______.

A.

increases

B.

does not change

C.

equals total variable cost

D.

decreases

When the cost of fuel​ increases, average fixed cost​ ______ and average variable cost.​ ______.  

A.

does not​ change; increases

B.

​increases; increases

C.

​increases; does not change

D.

​decreases; increases

When the cost of fuel​ increases, average total cost​ ______, and marginal cost​ ______.  

A.

does not​ change; does not change

B.

​increases; increases

C.

​increases; does not change

D.

does not​ change; increases

Janice Huffman has decided to start Finch Cleaning, a residential housecleaning service company. She is able to rent cleaning equipment at a cost of $720 per month. Labor costs are expected to be $65 per house cleaned and supplies are expected to cost $10 per house.

Required

1. Determine the total expected cost of equipment rental and the average expected cost of equipment rental per house cleaned, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month. Is the cost of equipment a fixed or a variable cost?

2. Determine the total expected cost of labor and the average expected cost of labor per house cleaned, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month. Is the cost of labor a fixed or a variable cost?

3. Determine the total expected cost of supplies and the average expected cost of supplies per house cleaned, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month. Is the cost of supplies a fixed or a variable cost?

4. Determine the total expected cost of cleaning houses, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month.

5. Determine the average expected cost per house, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month.

Complete this question by entering your answers in the tabs below.

• Required A
• Required B
• Required C
• Required D
• Required E

Determine the total expected cost of equipment rental and the average expected cost of equipment rental per house cleaned, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month. Is the cost of equipment a fixed or a variable cost? (Round "Average per unit" answers to 2 decimal places.)

Determine the total expected cost of labor and the average expected cost of labor per house cleaned, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month. Is the cost of labor a fixed or a variable cost?

Determine the total expected cost of cleaning houses, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month.

Determine the average expected cost per house, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month. (Round your answers to 2 decimal places.)

Production Data Physical units Prior Material Prior Conversion Current Material Current Conversion

BI Units 8 90% 40% ? ?

Units Started 50   

Units completed & To 46 100%   100%

EI Units   12 60% 30%

Costs data: Materials Conversion

Prior period costs (BI) $4,933,600 $910,400

Current Costs (added) $32,200,000 $13,920,000

Find the Equivalent Units, costs per Equivalent units, and Cost Reconciliation

Given the projected demands for the next six months, prepare an aggregate plan that uses inventory, regular time, overtime, subcontract and backorders. Regular time is limited to 170 units per month (Cost per Unit = $40 ). Overtime is limited to a maximum of 20 units per month (Cost per Unit =$60). Units purchased from the subcontractor (Cost per Unit = $72 ) cannot exceed 30 per month and the total purchases from the subcontractor over the 6 month period cannot be over 270 units. Backorders cannot exceed 60 units in any given month (Cost per Unit = $1 ) and must be no more than 0 in Period 6. Average Inventory Holding cost per Unit = $4. Forecasted Demand as well as Beginning and desired Ending Inventory are listed in the table below.

Required:
Find the Minimum Cost Production Plan by Creating a Spreadsheet in Excel. Use Solver to find the Minimum Cost Solution. Leave a copy of your Spreadsheet in the DropBox.

Total Cost Month 1 =

Hint: Range (8070 ,8170 )
Total Cost Month 2 =

Hint: Range (10230 ,10360 )
Total Cost Month 3 =

Total Cost Month 4 =

Total Cost Month 5 =

Hint: Range (6750 ,6910 )
Total Cost Month 6 =

Total Cost All Periods =

Hint: Range (48610 ,50010 )
Answer Format: No Dollar ($) signs or commas --- Answers should be whole numbers

Aggregate Planning

Given the projected demands for the next six months, prepare an aggregate plan that uses inventory, regular time, overtime, subcontract and backorders. Regular time is limited to 150 units per month (Cost per Unit = $20 ). Overtime is limited to a maximum of 30 units per month (Cost per Unit =$30). Units purchased from the subcontractor (Cost per Unit = $26 ) cannot exceed 40 per month and the total purchases from the subcontractor over the 6 month period cannot be over 150 units. Backorders cannot exceed 70 units in any given month (Cost per Unit = $1 ) and must be no more than 10 in Period 6. Average Inventory Holding cost per Unit = $4. Forecasted Demand as well as Beginning and desired Ending Inventory are listed in the table below.

Required:
Find the Minimum Cost Production Plan by Creating a Spreadsheet in Excel. Use Solver to find the Minimum Cost Solution. Leave a copy of your Spreadsheet in the DropBox.

Total Cost Month 1 =

Hint: Range (3300 ,3380 )
Total Cost Month 2 =

Hint: Range (3970 ,4050 )
Total Cost Month 3 =

Total Cost Month 4 =

Total Cost Month 5 =

Hint: Range (4350 ,4510 )
Total Cost Month 6 =

Total Cost All Periods =

Hint: Range (24220 ,26120 )
Answer Format: No Dollar ($) signs or commas --- Answers should be whole numbers.

Given the projected demands for the next six months, prepare an aggregate plan that uses inventory, regular time, overtime, subcontract and backorders. Regular time is limited to 160 units per month (Cost per Unit = $60 ). Overtime is limited to a maximum of 20 units per month (Cost per Unit =$90). Units purchased from the subcontractor (Cost per Unit = $108 ) cannot exceed 50 per month and the total purchases from the subcontractor over the 6 month period cannot be over 200 units. Backorders cannot exceed 70 units in any given month (Cost per Unit = $5 ) and must be no more than 10 in Period 6. Average Inventory Holding cost per Unit = $10. Forecasted Demand as well as Beginning and desired Ending Inventory are listed in the table below.

Required:
Find the Minimum Cost Production Plan by Creating a Spreadsheet in Excel. Use Solver to find the Minimum Cost Solution. Leave a copy of your Spreadsheet in the DropBox.

Total Cost Month 1 =

Hint: Range (14590 ,14790 )
Total Cost Month 2 =

Hint: Range (13500 ,13610 )
Total Cost Month 3 =

Total Cost Month 4 =

Total Cost Month 5 =

Hint: Range (11510 ,11600 )
Total Cost Month 6 =

Total Cost All Periods =

Hint: Range (81710 ,82710 )
Answer Format: No Dollar ($) signs or commas --- Answers should be whole numbers.

The perfectly competitive firm should produce in the

a. short run if price is below average variable cost.
b. long run if price is below average variable cost.
c. short run if price is below average total cost but above average variable cost. d. long run if price is below average total cost but above average variable cost.

d. long run if price is below average total cost but above average variable cost.

Q3 . A cost function for a beef production business is give below;

TC = 100 + 3y – 0.2y2 + 0.04y3

a. From the above cost function, derive the exact equation for;

i. Marginal Cost (MC)

ii. Average Cost (AC)

b. Using the above cost function, calculate;

i. Total Fixed Cost

ii. Total Variable Cost

iii. Total Marginal when Y = 4

iv. Level of output Y when Average Variable Cost is at minimum.

Answer need to be in paragraph

1) Explain and discuss how you think studying for an exam is subject to the Law of Diminishing Returns. You might also throw into the discussion how this relates to opportunity cost and economic choice (marginal cost versus marginal benefit) of how you choose to spend your time.

THIS IS A GOOD POINT, NEAR THE MIDDLE OF THE SEMESTER, TO POINT OUT AGAIN THAT EVERY DISCUSSION REQUIRES AT LEAST A COUPLE OF PARAGRAPHS, AND THAT EVERY DISCUSSION IS BASED ON THE RELEVANT READINGS. THE GOAL IS TO SHOW THAT YOU KNOW HOW TO USE CONCEPTS LEARNED IN THE COURSE. .

2) TIME PERIODS

a.What is the distinction made by economists between the short run and the long run? Why is it important?

b. Cite and explain examples from various sized firms and/or various products  in the garment industry.

3) Implicit and Explicit Costs

(a) Why do economists look at implicit costs?

(b) Look at two businesses (one big and one small) and for each identify what might be their implicit costs. Be specific!