3. Amortize a $250,000 (Sale Price) house on a 30 year loan at 4.0% annual interest rate Amortize a $250,000 (Sale Price) house on a 15 year loan at 3.0% annual interest rate (7) What will be the total cost of the 30 year loan? (Total of all Interest & Principle ) (8) What will be the total cost of the 15 year loan? (Total of all Interest & Principle ) (9) At the end of 4 years, how much less will the loan balance of the 15 year mortgage be compared to the 30 year? (10) If you were buying a house at age 30, which loan would you prefer?
In: Finance
Consider two countries, A and B, whose respective industries produce goods qA and qB. Total world output of the good is given by Q=qA+qB. There is a world demand given by p=102-Q. Suppose that the cost function for country A is given by CA(qA)=7qA while the cost function in country B is given by CB(qB)=3qB. The production of the good generates greenhouse gas emissions which cause global climate change. Total world emissions are 0.5 per unit of good, such that total world emissions are 0.5Q. If the two countries' industries compete in a Cournot fashion, what will the total world emissions be?
In: Economics
Which statement below is most correct?
a) The economic theory of the firm focuses upon explaining firms' decision making by
assuming firms are primarily motivated by attempting to maximize their contribution to
general public's social welfare.
b)
The theory of the firm holds that the primary goal of a firm is to maximize the
discounted present value of the positive difference between the firm's total revenue and the firm's total cost or to minimize the present value of the negative difference between the firm's total revenue and total cost.
c) The value of a firm is equal to the sum of all future profits (NOT discounted) that will be
generated by the firm.
d) None of these three answers are even partially correct.
In: Economics
Example 4:
Suppose that the monopolist faces a demand curve for its widgets as q = 9 - 0.2p. The firm’s marginal revenue and cost functions are: MR(q) = 45 – 10q and MC(q) = 15 + 5q. The firm’s total cost function is C(q) = 2.5q2 + 15q + 3.
In: Economics
Inventory cost flow methods; periodic system
Altira Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2017 is available:
Aug.1 | Inventory on hand—6,500 units; cost $7.90 each. |
8 | Purchased 24,000 units for $6.9 each. |
14 | Sold 18,000 units for $13.4 each. |
18 | Purchased 13,000 units for $6.4 each. |
25 | Sold 17,000 units for $12.4 each. |
31 | Inventory on hand—8,500 units. |
Required:
Determine the inventory balance Altira would report in its August 31, 2017, balance sheet and the cost of goods sold it would report in its August 2017 income statement using each of the following cost flow methods:
FIFO | Cost of Goods Available for sale | Cost of Goods Available Sold | Ending Inventory – Periodic FIFO | ||||||
# of units | Cost per unit | Cost of goods available | # of units | Cost per unit | COGS | # of units in end inventory | Cost per unit | Ending inventory | |
Beginning Inventory | |||||||||
Purchases: | |||||||||
August 8 | |||||||||
August 18 | |||||||||
TOTAL | |||||||||
LIFO | Cost of Goods Available for sale | Cost of Goods Available for sale Periodic LIFO | Ending Inventory – Periodic LIFO | ||||||
# of units | Cost per unit | Cost of goods available | # of units | Cost per unit | COGS | # of units in end inventory | Cost per unit | Ending inventory | |
Beginning Inventory | |||||||||
Purchases: | |||||||||
August 8 | |||||||||
August 18 | |||||||||
TOTAL | |||||||||
Average Cost | Cost of Goods Available for sale | Cost of Goods Available for sale periodic FIFO | Ending Inventory – Periodic FIFO | ||||||
Beginning Inventory | |||||||||
Purchases: | |||||||||
January 8 | |||||||||
January 19 | |||||||||
Total | |||||||||
In: Accounting
“IBM should never sell its product for less than it costs to produce.” If “costs to produce” is interpreted as average total cost, is this correct? If it is interpreted as average variable cost, is it correct? If it is marginal cost, is the statement correct?
In: Economics
Suppose we have two ways to source a product. One way is from the local supplier, while a second way is from a distant supplier. The terms and parameters for each source are as given in following table:
| ?Local Supplier | Distant Supplier | |
|---|---|---|
| Cost per unit, c | $1.15 | $1.00 |
| Lead time (no uncertainty), L | 3 weeks | 12 weeks |
| Transportation cost per unit, c?t | $0.10 | $0.12 |
Suppose demand for the component is ?=500/week; ?=100/week. (Assume normally distributed demand)
Suppose we have a holding cost of h=$0.01/week. This applies to all inventory in the system.
- Compute the total landed cost per unit (equal to the procurement cost plus transportation cost plus holding cost for pipeline stock) for each source. Local supplier total landed cost (TLC)= Distant supplier total landed cost (TLC)=
- Suppose we source from a single supplier, and suppose we assume a periodic review policy with r = 1 week; suppose we have a shortage cost ? = 0.30/unit. What is the base stock for each option that minimizes the expected costs? Base Stock for Local Supplier= Base Stock for Distant Supplier=
- Suppose we follow the base stock policy calculated in part 2. What is the expected total cost per week for each option? The expected total cost is the sum of the procurement cost, the transportation cost, the inventory holding cost for the pipeline inventory plus the cycle stock and safety stock, and the shortage cost. Local Supplier= Distant Supplier=
- Suppose we implement a dual sourcing strategy, and we place a standing order with the distant supplier for 350 units per week. Suppose it is Jan. 7, 2019, which is a review epoch at which we place an order to the local supplier. The prior orders from both the local and distant supplier have been received and the inventory on hand is 1000 units.
There are two orders in process with the local suppler: an order for 75 units to be delivered on Jan. 14, and on order for 100 units to be delivered on Jan. 21. In addition, under the terms of the standing order, the distant supplier will deliver 350 units on Jan. 14, Jan. 21, Jan. 28, etc.
Suppose the base stock level for the local supplier is 2370.
How much is the local supplier order on Jan. 7 for delivery on Jan. 28?
In: Accounting
The following table shows the costs that a firm faces in a perfect competitive market:
|
Output |
Fixed Cost |
Variable Cost |
Total Cost |
Average Total Cost |
Marginal Cost |
|
0 |
0 |
||||
|
1 |
40 |
||||
|
2 |
100 |
||||
|
3 |
170 |
||||
|
4 |
250 |
||||
|
5 |
360 |
||||
|
6 |
580 |
||||
|
7 |
920 |
a. Taking into account that the firm has a fixed cost of $200, complete the table. (20 points)
b. If the market price is $340, what is the level of output that the firm should produce in order to maximize profit? Calculate the maximum profit. (5 points)
c. If the market price falls to $110, how much the firm should produce, how much are the profits and what should the firm do in the long run? (5 points)
In: Economics
Adams Manufacturing Company established the following standard price and cost data:
| Sales price | $ | 8.50 | per unit |
| Variable manufacturing cost | $ | 3.70 | per unit |
| Fixed manufacturing cost | $ | 2,800 | total |
| Fixed selling and administrative cost | $ | 600 | total |
Adams planned to produce and sell 2,200 units. Actual production and sales amounted to 2,400 units.
Assume that the actual sales price is $8.15 per unit and that the actual variable cost is $3.95 per unit. The actual fixed manufacturing cost is $2,500, and the actual selling and administrative costs are $620.
Required
a.&b. Determine the flexible budget variances and classify the effect of each variance by selecting favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)
In: Accounting
In: Civil Engineering