A firm produces a single output using two variable inputs (denoted ?1 and ?2). The firmproduction function is given by ? = Φ(?1, ?2) = (?1?2) ^0.5. The firm can employ as much of either input it desires by incurring constant (and respectively denoted) per-unit input costs of ?1 and ?2. Assume throughout that all prices and quantities are positive and infinitely divisible. Finally, let ?0 denote the “target” level of output that the firm envisions producing when deciding how much of the inputs to employ.

1. (a) Show that the firm’s production technology displays a diminishing (physical) marginal product with respect to either input.

2. (b) Write down the firm’s cost minimization problem and solve for the firm’s total cost function, ??(?1, ?2, ?0). Show that the total cost function is homogeneous of degree one in input prices (i.e., ??(??1, ??2, ?0) = ? × ??(?1, ?2, ?0) for ? > 0). Provide an interpretation of this result.

3. (c) Show that the firm’s average total cost and marginal cost functions are equal and constants (i.e., do not depend on the level of output produced by the firm). What does this imply about the firm’s production technology?

John Smith is requesting your assistance in determining a cost equation for forecasting his expenses for his ABC restaurant. He provides costs at two extremes as follows:

Please use the table above to answer the question 37 to 40

37.

What costs are the mixed cost?

Group of answer choices

a. Salaries, Wage, and Supplies

b. Employee benefits and Supplies

c. Utilities, Rent, and Insurance

d. Employee benefits and Utilities

38.

What is the total fixed cost for ABC restaurant?

Group of answer choices

a. $30,000

b. $35,000

c. $30,500

d. $35,500

39.

What is the total variable cost per unit for ABC restaurant?

Group of answer choices

a. $11.00

b. $10.50

c. $12.00

d. $9.00

40.

If the restaurant 2,000 covers, what is the total cost?

Group of answer choices

a. $50,000

b. $50,500

c. $52,500

d. $55,000

Imtiaz Super Storesells Blue Band Margarines. Its annual demand is 108,500 units. The shop incurs ordering cost of Rs650/= order, irrespective of the order size. They buy it at Rs150 per unit. The carrying cost is 12% on average inventory investment plus rent, insurance, property tax, and supervision for each unit is Rs3. The maximum sale per day is360units. It takes 5days to receivethese items from supplierafter placement of order quantities. The annual working days of Store are350 days.

Required:                                                                                                            

i). Determine the Economic order quantities (EOQ)

ii). Determine Safety stock maximum.

iii). Determine Reorder point levels

iv). Total annual inventory cost (Total annual ordering cost and total annual carrying cost)

v). A Supplier offers 1% discount to Imtiaz Supper Store, if they purchase the goods at leastat 10,000 units at a time instead of above EOQ level (Part-i). Should they accept this offer? Please advice to management with relevant comparative workings.

vi). Why Economic order quantities may be wrong some time for any particular item to purchase in a given situation?

Ramsha Industries Makes Rocking Chairs. The Chairs Are Assembled In The Assembly Department ... Question: Ramsha Industries makes rocking chairs. The chairs are assembled in the Assembly Department and s... Ramsha Industries makes rocking chairs. The chairs are assembled in the Assembly Department and stained and sealed in the Finishing Department. Chairs are tested for quality in the Assembly Department before being transferred to Finishing. Normal spoilage (defective chairs) averages 1% of good units in the Assembly Department. Ramsha uses the FIFO cost method of process costing. Activity during February in the Assembly Department: Production activity:

   Material Conversion

Work in process, beginning inventory 1,000    90%    50%

Started in February 6,000

Good units transferred out 6,000

Work in process, ending inventory 900 95% 75%

Cost activity: total    material    conversion

Total Material Conversion Costs in beginning WIP 83,830    $ 65,080 $ 18,750 $

February costs    525,570 387,520 138,050

What is the total cost of the units transferred out? What is the cost of ending inventory?

How much should be charged to Loss from Abnormal Spoilage?

What is the unit cost of the goods transferred out in February?

Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must develop an aggregate plan given the forecast for engine demand shown in the table. The department has a regular output capacity of 140 engines per month. Regular output has a cost of $65 per engine. The beginning inventory is zero engines. Overtime has a cost of $115 per engine.

Month 1 2 3 4 5 6 7 8

Total Forecast 130 135 130 143 130 135 135 134 1,072

b. Compare the costs to a level plan that uses inventory to absorb fluctuations. Inventory carrying cost is $3 per engine per month. Backlog cost is $135 per engine per month. There should not be a backlog in the last month. Set regular production equal to the monthly average of total forecasted demand. Assume that using overtime is not an option. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Round average inventory row, Inventory cost row, and Total row values to 1 decimal.)

Environmental Cost Report Verde Company reported operating costs of $27,000,000 as of December 31, 2015, with the following environmental costs: Testing for contamination $ 405,000 Inspecting products 378,000 Treating toxic waste 1,053,000 Obtaining ISO 14001 certification 756,000 Designing processes 378,000 Cleaning up oil spills 1,836,000 Maintaining pollution equipment 297,000 Cleaning up contaminated soil 3,429,000 Required: Hide 1. Prepare an environmental cost report, classifying costs by quality category and expressing each as a percentage of total operating costs. Round percentages to two decimal places, if rounding is required. For example, 5.79% would be entered as "5.79". Verde Company Environmental Cost Report For the Year Ended December 31, 2015 Environmental Cost Total Environmental Cost Percentage of Operating Costs Prevention costs: Obtaining ISO 14001 certification $ Designing processes $ % Detection costs: Testing for contamination $ Inspecting products % Internal failure costs: Treating toxic waste $ Maintaining pollution equipment % External failure costs: Cleaning up oil spills $ Cleaning up contaminated soil % Total quality costs $ %

Cost of Production Report The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:

All direct materials are placed in process at the beginning of production.

a. Prepare a cost of production report, presenting the following computations:

Direct materials and conversion equivalent units of production for August.

Direct materials and conversion costs per equivalent unit for August.

Cost of goods finished during August.

Cost of work in process at August 31.

If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July). If required, round your answers to the nearest cent.

The following data pertains to activity and costs for two months at PQ Company:

Assuming that these activity levels are within the relevant range, the mixed cost for June was:

4 points   

QUESTION 16

Production costs for The Widget Factory are listed below:

Management believes that production costs depend on the number of machine hours. Using the high-low method to estimate the variable and fixed components of cost, the cost formula would be:

4 points   

QUESTION 17

A partial listing of costs incurred at Gollum Corporation during January appears below:

Direct materials: $68,000

Factory foremen salaries $125,000

Lubricants for factory maintenance $2,000

Direct Labor $143,000

Janitorial COsts for factory $33,000

Insurance on factory building $27,000

Repair costs for factory equipment $19,000

What is the total amount of manufacturing overhead costs for the month of January?

4 points   

QUESTION 18

A partial listing of  costs incurred at Blackburn Corporation during January appears below:

direct materials $198,000

depreciation of administrative equipment $25,000

rental expense for factory equipment $81,000

direct labor $213,000

indirect materials $21,000

sales saleries $108,000

electrical costs of the factory $12,000

warehouse costs for storing finished goods $9,000
What is the total amount of product costs for the month of January?

4 points   

QUESTION 19

Frost Corporation reported the following results for March:

sales: $762,000

cost of all goods sold- all variable $401,000

total variable selling expense $122,000

total fixed selling expense $78,000

total variable administrative expense $28,000

total fixed administrative expense $39,000
The gross margin for March is:

4 points   

QUESTION 20

Gorman Corporation reported the following results for March:

Sales $654,000

Cost of goods sold- all variables $321,000

Total variable selling expense $89,000

Total fixed selling expense $56,000

total variable administrative expense $23,000

total fixed administrative expense $15,000

The contribution margin for March is:

Indicate whether the following losses are covered under Section II of the homeowners policy. Assume there are no special endorsements and no deductible. Give reasons for your answers.

1. The named insured’s dog bites a neighbor’s child

2. The named insured's dog eats a neighbor's coat.

3. A neighbor’s child falls off a swing in the named insured’s yard and breaks an arm.

4. The named insured falls on his icy sidewalk and breaks a leg.

5. While driving to the supermarket, the named insured injures another motorist with the automobile.

6. The named insured paints houses for a living. A can of paint accidentally spills onto a customer’s roof and discolors it.

7. The named insured falls asleep while smoking a cigarette in a rented hotel room, and the room is badly damaged by the fire.