XYZ Company reported the following information: June July Cost A $18,000 $0.20 per unit Cost B $19,000 $29,800 Cost C $17,000 $0.34 per unit Units sold 50,000 units 90,000 units XYZ Company expects to sell 76,000 units in August at a selling price of $1.50 per unit Calculate the amount of net income XYZ Company would expect to earn in August.

Lower-of-Cost-or-Market Inventory

On the basis of the following data:

Determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 10.

Restex has a debt-equity ratio of 0.76, an equity cost of capital of 18 %, and a debt cost of capital of 9 %.

Restex's corporate tax rate is 30%, and its market capitalization is $ 199 million.

a. If? Restex's free cash flow is expected to be $5 million one year from now and will grow at a constant? rate, what expected future growth rate is consistent with?Restex's current market? value?

b. Estimate the value of Restex's interest tax shield.

For the given cost function ,C(x)=3136+787x+x^2

a) The average cost at the production level 49 is

b) The marginal cost at the production level 49 is

c) The production level that will minimize the average cost is

446

economic profit minus explicit cost.

business profit plus economic profit.

business profit minus economic profit.

economic profit minus business profit.

(a)   At what output level and at what price will the firm produce in the short run? What will be the total profit?

(b)   What will happen to demand, price, and profit in the long run?

n October 2017 a pound of apples cost $1.43, while oranges cost $1.07. Two years earlier the price of apples was only $1.22 a pound and that of oranges was $0.93 a pound.

What was the annual compound rate of growth in the price of apples?

What was the annual compound rate of growth in the price of oranges?

If the same rates of growth persist in the future, what will be the price of apples in 2030?

If the same rates of growth persist in the future, what will be the price of oranges in 2030?

_{Matching Exercise – Costs of Production}

_TERM

1. _{Implicit Cost}

2. _{Normal Profit}

3. _{Factor substitution}

4. _{Explicit Cost}

5. _{Alternative cost}

6. _{Decreasing Returns to Scale}

7. _{Envelope Curve}

8. _{MC=MR rule}

9. _{Marginal Cost}

10. _{Economic profit}

11. _{Profit maximization in the short run}

12. _{Total fixed costs}

13. _{Constant costs industry}

14. _{Stage II}

15. _{Production function}

16. _{Shutdown point}

17. _{Variable input}

18. _{Marginal Revenue}

19. _{Sunk Cost}

20. _{Variable Costs}

_DEFINITION

_{a. The area in which every firm will produce.}

_{b. Another name for the long run average total cost curve.}

_{c. The cost of self-owned, self-utilized resources}

_{d. The profits necessary to ensure that a firm stays in business. Considered by economists to be part of implicit costs.}

_{e. The change in total cost associated with a one unit change in output.}

_{f. Inputs that rise and fall with the quantity of output.}

_{g. The substituting of one input for another to produce a given level of output.}

_{h. The addition to total revenue from selling one more unit of the product}

_{i. The ordinary expenses of the firm that accountants include, such as payroll costs and payments for raw materials. Accounting Costs}

_{j. A cost that has been incurred and cannot be recovered}

_{k. Costs of the fixed inputs such as rent. Does not change with changes in output. Also called overhead costs.}

_{l. The costs resulting from variable inputs.}

_{m. The rule a firm should follow to find the profit maximizing quantity.}

_{n. The production relationship that would lead to increasing costs.}

_{o. The value of what particular resources could have produced had they been used in the best alternative way; opportunity cost.}

_{p. An industry with a horizontal long run supply curve; its expansion does not result in an increase or decrease in input prices.}

_{q. The difference between total cost and total revenue.}

_{r. The relationship between the inputs used in production and the level of output.}

_{s. Considered to be the goal of every firm.}

_{t. The minimum point on the AVC. The lowest price at which the firm will produce.}

Periodic and Perpetual Systems—Calculating Ending Inventory and Cost of Sales using Average Cost (Moving Average), FIFO, and LIFO

Undew Inc.’s inventory records showed the following data for an item it sells regularly.

a. Assuming that Undew maintains a periodic inventory system, compute ending inventory and cost of goods sold for the month-ended January 31 using (1) average cost, (2) FIFO, and (3) LIFO.

Note: Round your final answers only to the nearest dollar.

Note: Do not round the cost per unit amounts in your calculations.

b. Assuming that Undew maintains a perpetual inventory system, compute ending inventory and cost of goods sold for the month-ended January 31 using (1) moving average, (2) FIFO, and (3) LIFO.

Note: Round your final answers only to the nearest dollar.

Note: Do not round the cost per unit amounts in your calculations.