Suppose Dan's cost of making pizzas is
C(Q)=4Q+(Q2/40),
and his marginal cost is
MC=4+(Q/20).
Dan is a price taker.
a. What is Dan's supply function?
| Q = 20P - 20 if P ≥ 4.5. | |
| Q = 20P - 80 if P ≥ 4. | |
| Q = 40P + 80 if P ≥ 4. | |
| Q = 20P + 80 if P ≥ 4. | |
| Q = 20P - 40 if P ≥ 4.5. |
b. What if Dan has an avoidable fixed cost of $2.5? What is Dan's
supply function?
| Q = 40P + 20 if P ≥ 4. | |
| Q = 20P - 80 if P ≥ 4.5. | |
| Q = 20P + 80 if P ≥ 4.5. | |
| Q = 20P - 40 if P ≥ 4. | |
| Q = 40P - 80 if P ≥ 4.5. |
In: Economics
Problem 1-24A Cost Classification and Cost Behavior [LO1-1, LO1-2, LO1-3, LO1-4] The Dorilane Company specializes in producing a set of wood patio furniture consisting of a table and four chairs. The set enjoys great popularity, and the company has ample orders to keep production going at its full capacity of 4,200 sets per year. Annual cost data at full capacity follow: Direct labor $ 92,000 Advertising $ 99,000 Factory supervision $ 67,000 Property taxes, factory building $ 18,000 Sales commissions $ 65,000 Insurance, factory $ 6,000 Depreciation, administrative office equipment $ 2,000 Lease cost, factory equipment $ 17,000 Indirect materials, factory $ 20,000 Depreciation, factory building $ 108,000 Administrative office supplies (billing) $ 5,000 Administrative office salaries $ 114,000 Direct materials used (wood, bolts, etc.) $ 426,000 Utilities, factory $ 43,000 Required: 1. Enter the dollar amount of each cost item under the appropriate headings. Note that each cost item is classified in two ways: first, as variable or fixed with respect to the number of units produced and sold; and second, as a selling and administrative cost or a product cost. (If the item is a product cost, it should also be classified as either direct or indirect.) 2. Compute the average product cost of one patio set. (Round your answer to nearest whole dollar.) 3. Assume that production drops to only 1,000 sets annually. Would you expect the average product cost per set to increase, decrease, or remain unchanged? Increase Decrease Remain unchanged
In: Accounting
XYZ Ltd operate two production lines. One was installed in April 2018 at a cost of €200,000. The other was installed in February 2020 at a cost of €340,000. They charge depreciation using the straight-line method at a rate of 15% pa for an estimated useful economic life of 5 years, charging a full year in the year of acquisition.
As at the year ended 31 Dec 2021, the production manager has filed a report noting that although the line continues to work effectively, the machinery involved has been superseded by latest generation technology, and as such the residual value is now expected to be 5% of original cost. The CFO wants to consider including this change in the accounts for the year ending 31 Dec 2021.
a) Calculate the annual depreciation rate had the residual value of 5% been used from the point of acquisition? (1 mark)
b) What was the Net Book Value of the production lines as at 31 Dec 2020? (3 marks)
c) What would be the Net Book Value of the production lines as at 31 Dec 2021 if rebasing the depreciation to the rate computed in part a)? (2 marks)
d) What should be the depreciation charge for the year ended 31 Dec 2021 if including the changes? (2 marks)
In: Computer Science
Monthly fixed cost: 10 000,-
Variable cost: 15,-/customer
Volume: 1 500 customers per month
Price: 25,-/customer
When business started, there came only 800 customers/month.
However, fixed cost was only 5000,-.
a)Break-even?
b)Profit?
c)How much should the price be to reach the original target in this situation with 800 customers?
In: Accounting
Chapter 6 Homework
Problem 6A-8 High-Low Method; Predicting Cost [LO6-10]
Nova Company’s total overhead cost at various levels of activity are presented below:
| Month | Machine- Hours |
Total Overhead Cost |
|||
| April | 46,000 | $ | 168,260 | ||
| May | 36,000 | $ | 144,660 | ||
| June | 56,000 | $ | 191,860 | ||
| July | 66,000 | $ | 215,460 | ||
Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 36,000 machine-hour level of activity is:
| Utilities (variable) | $ | 46,800 |
| Supervisory salaries (fixed) | 45,000 | |
| Maintenance (mixed) | 52,860 | |
| Total overhead cost | $ | 144,660 |
Nova Company’s management wants to break down the maintenance cost into its variable and fixed cost elements.
Required:
1. Estimate how much of the $215,460 of overhead cost in July was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $215,460 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.)
2. Using the high-low method, estimate a cost formula for maintenance in the form Y = a + bX.
3. Express the company’s total overhead cost in the form Y = a + bX.
4. What total overhead cost would you expect to be incurred at an activity level of 41,000 machine-hours?
In: Accounting
Retail Corp adopted the dollar-value LIFO method on 1-1-2016
|
Date |
Year-end inventory at year-end cost |
Cost index at date indicated |
separate into layers and multiply by own index | sum recomputed layers | |
|
1-1-16 |
$3,420,000 |
1.00 |
|||
|
12-31-16 |
$4,000,000 |
1.07 |
|||
|
12-31-17 |
$4,100,000 |
1.10 |
Given the above information, please answer the following questions:
2A. What is the base inventory value ($)?
2B. What is the dollar-value LIFO inventory at 12-31-16?
2C. What is the dollar-value LIFO inventory at 12-31-17?
In: Accounting
Retail Corp adopted the dollar-value LIFO method on 1-1-2016.
|
Date |
Year-end inventory at year-end cost |
Cost index at date indicated |
|||
|
1-1-16 |
$2,340,000 |
1.00 |
|||
|
12-31-16 |
$2,650,000 |
1.06 |
|||
|
12-31-17 |
$2,680,000 |
1.10 |
Given the above information, please answer the following questions:
1A. What is the base inventory value ($)?
1B. What is the dollar-value LIFO inventory at 12-31-16?
1C. What is the dollar-value LIFO inventory at 12-31-2017?
In: Accounting
alpha lumber co. has the following short-run total
costs:
total explicit cost=$40,000
total implicit cost=$20,000
how profitable (economic profit, normal profit or economic loss) is
the company in each of the following cases:
A. Total revenue=$65,000
B. Total revenue=$60,000
C. Total revenue=$55,000
In: Economics
Exercise 17-25 Postretirement benefits; determine APBO, service cost, interest cost; prepare journal entry [LO17-10, 17-11]
The following data are available pertaining to Household
Appliance Company's retiree health care plan for 2018:
| Number of employees covered | 2 | ||
| Years employed as of January 1, 2018 | 2 | [each] | |
| Attribution period | 25 | years | |
| Expected postretirement benefit obligation, Jan. 1 | $ | 63,000 | |
| Expected postretirement benefit obligation, Dec. 31 | $ | 66,000 | |
| Interest rate | 5 | % | |
| Funding | none | ||
Required:
1. What is the accumulated postretirement benefit obligation at the
beginning of 2018?
2. What is interest cost to be included in 2018 postretirement
benefit expense?
3. What is service cost to be included in 2018 postretirement
benefit expense?
4. Prepare the journal entry to record the postretirement benefit
expense for 2018.
In: Accounting
Key terms: Strategic Alliances, Build-Borrow-or-buy Framework, Cost Leadership, Focus Cost Leadership, Blue-Ocean Strategy
Your business is a tech company that sells new tech to 3 markets: U.S., Europe and Asia. Using the 5 key terms above explain in detail how you would apply these concepts in your business strategy? And how can you use these concepts in developing a strategy in your future workplaces?
In: Operations Management