A hospital consortium contracted with a private company to collect fees and maintain health facilities that adjoin their property. Users of the health facility can pay cash of R10 for a daily visit or they can purchase a pass. The pass has a magnetic strip that is swiped through the entrance device each time an individual enters the facility. This subtracts daily fee from the pass balance for each day used. The passes are issued for a fee of R365, which are good for 365 days. Refunds are not issued on the pass. Last year R18,650 was collected for daily visits, R438,000 of annual passes were issued, and R206,225 of pass usage was registered on the scanning equipment. How much should the company recognize as revenue for the year? Explain how the revenue recognition rule should be applied in this case.

Determine where the given function is concave up and where it is concave down.

​f(x)= 2x^3-6x^2-90x

Find the maximum profit and the number of units that must be produced and sold in order to yield the maximum profit. Assume that​ revenue, R(x), and​ cost, C(x), of producing x units are in dollars

R(x)=50x-0.1^2, C(x)=4x+10

Find the number of units that must be produced and sold in order to yield the maximum​ profit, given the equations below for revenue and cost.

R(x)=50x-0.5x^2

C(x)=6x+4

Find the absolute maximum and minimum values of the function over the indicated​ interval, and indicate the​ x-values at which they occur.

f(x)=x^2-6x-2 ; [1,7]

Suppose a firm can sell its product for a price of $75 (no more, no less). Suppose that the marginal cost curve and average variable cost curves cross at $100 and a quantity of 10. Assume that fixed costs are $0. At a quantity of 10, total revenue would be: 750

At a quantity of 10, variable cost would be: ________ 0 or 1,000

Since fixed costs are $0, profit at 10 units of output would therefore be: ________ -250, 0 ,750

However, if the firm chose to produce nothing, total revenue would instead be: _________ 0, 750, 75

and variable cost would be: _______ 250, -750, 0

Therefore if the firm produces nothing profit would be -250 .

The BEST course of action for this firm would be to produce: ________Nothing because P < AVC or Produce 10 units of Output

The following example pertains to Bluefield Company for 2005.

Cash received from customers during 2005$140,000

Cash received from tenants during 2005    56,000

Cash paid for salaries during 2005    43,000

Cash paid for income taxes during 2005    23,000

Cash paid to suppliers during 2005    78,000

Jan. 1Dec. 31

Accounts receivable$5,000$9,000

Accounts payable11,000   7,000

Income tax payable    7,000    3,000

Inventory14,00020,000

Prepaid salaries 4,000    2,000

Unearned rent revenue 1,000    6,000

Instructions

Compute the amount of each of the following items for 2005 on the accrual basis.

1. Sales

2. Rent revenue

3. Salaries expense

4. Income tax expense

5. Cost of goods sold

Suppose that MUB is the only producer of electricity in the little town of Microeconomica. The faces a demand curve of the form: P = 210 – 4Q, where P (measured in dollars) and Q (measured in kilowatts) stand for the unit price and quantity of electricity produced, respectively. Suppose that in producing electricity for the town, MUB incurs production costs that total C(Q) = 5Q.

a. What is MUB’s marginal cost function?

b. How many kilowatts of electricity should MUB produce to maximize its profits.

c. What is the firm’s resulting optimal price?

d. At the profit-maximizing price, what is MUB’s total revenue?

e. Now suppose that because of technological issues, MUB’s marginal cost increases to $20. Calculate the new optimal quantity, price, and revenue.

Allegience Insurance Company’s management is considering an advertising program that would require an initial expenditure of $165,500 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $75,000, with associated expenses of $25,000. The additional sales revenue and expenses from the advertising program are projected to increase by 10 percent each year. Allegience’s tax rate is 30 percent. (Hint: The $165,500 advertising cost is an expense.)

Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.)

Required:
1. Compute the payback period for the advertising program.
2. Calculate the advertising program’s net present value, assuming an after-tax hurdle rate of 10 percent. (Round your intermediate calculations and final answer to the nearest whole dollar.)

Jefferson Animal Rescue has the following year end trial balance.

Prepare the appropriate closing entries

1.) Firm has monopoly power. Its demand equation is given by P(q) = 10 –q. Its total cost of producing its output is given by the function TC(q) = (q2/8) + q+ 16, and it can be shown that its marginal cost equation is MC(q) = (q/4) + 1.1.

Profit maximization

a.Write down the firm’s marginal revenue equation, which expresses MR as a function of the firm’s output q.

b.Calculate the firm’s profit-maximizing output q*.

c.Calculate the price the firm would charge at the profit-maximizing output.

d.Calculate the firm’s marginal cost and marginal revenue at the profit-maximizing output.

e.Calculate the firm’s profit at the output and price you found in parts (b) and (c).Show your work.

Exercise 20.4 Computing the Break-Even Point (LO20-4, LO20-5, LO20-6)