Baker premium is a company producing buns in a rented factory with the rental cost of $100 per day. The wage per worker is $40 per day. The table below shows the daily amount of buns produced with a different number of workers employed in the factory
| Workers | Buns |
1 | 30 |
| 2 | 70 |
| 3 | 130 |
| 4 | 210 |
| 5 | 260 |
| 6 | 300 |
| 7 | 320 |
| 8 | 330 |
(a) Compute and explain the minimum price per bun for Baker Premium to operate in the short-run and in the long-run
(b) If the price per bun is $1.50, determine the optimal output and compute the daily profit or loss incurred by Baker Premium. Explain why this ouput is optimal
(c) Consider the utility company in a city which is the only licensed water supplier in the city. The demand for water is given by P = 10 - 0.006Q and the marginal cost of the company is given by MC = 2 + 0.004Q. Identify the optimal output, the market price, the consumer surplus, the producer surplus and the deadweight loss in the water market.
In: Economics
When will producer surplus, as shown on a graph of demand and marginal cost, be exactly equal to the profit earned by a monopolist firm (or any firm that faces its own demand curve)?
a. When fixed costs are equal to zero
b. When the marginal cost is constant
c. When the average total cost is u-shaped
d. When fixed costs and variable costs are equal
In: Economics
1. Let's say that you are looking at a table with output and cost data for a firm and you observe the following: At a quantity of 10 units, the firm's marginal cost and marginal revenue both equal $.75. At a quantity of 18 units, the firm's marginal cost reaches its lowest point at $.35. At a quantity of 26 units, the firm's average total cost reaches a minimum of $.50. At a quantity of 28 units, the firm's marginal cost and marginal revenue also both equal $.75. At a quantity of 30 units, the firm's marginal cost is $1.00 and its marginal revenue is $.65. If this firm wants to maximize its profits, which quantity should it produce?
2.
Consider the following table with a monopolist's cost and revenue data. The profit-maximizing output is _____, and the price which the monopolist will charge at this output is _____ (Hint: find the marginal revenue values):
| Output | Price | TR |
TC |
MC |
| 0 | $8.00 | $0 | $150 | - |
| 50 | 7 | 350 | 350 | 4 |
| 100 | 6 | 600 | 530 | 3.6 |
| 150 | 5 | 750 | 675 | 2.9 |
| 200 | 4 | 800 | 800 | 2.5 |
| 250 | 3 | 750 | 950 | 3 |
| 300 | 2 | 600 | 1,125 | 3.5 |
3. Let's say that you are looking at a table with output and cost data for a firm and you observe the following: At a quantity of 12 units, the firm's marginal cost and marginal revenue both equal $.75. At a quantity of 30 units, the firm's marginal cost and marginal revenue also both equal $.75. At a quantity of 22 units, the firm's marginal cost reaches its lowest point at $.35. At a quantity of 28 units, the firm's average total cost reaches a minimum of $.50. If this firm wants to maximize its profits, which quantity should it produce?
4.
| Output | Price | Marginal Cost |
| 400 | 10 | 0.50 |
| 500 | 9 | 1.50 |
| 600 | 8 | 2.50 |
| 700 | 7 | 3.50 |
| 800 | 6 | 5.50 |
| 900 | 5 | 6.50 |
Please consider the above data for a monopolist. At which output level does the monopolist maximize its profits (or minimize its losses)?
In: Economics
Bondi Corporation makes automotive engines. For the most recent month, budgeted production was 3,400 engines. The standard power cost is $2.20 per machine-hour. The company's standards indicate that each engine requires 11.2 machine-hours. Actual production was 3,700 engines. Actual machine-hours were 39,740 machine-hours. Actual power cost totaled $89,780.
Required:
Determine the rate and efficiency variances for the variable overhead item power cost. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
In: Accounting
Perrette Motor Company rebuilds automobile engines that have been damaged or are in need of extensive repair. The rebuilt engine has a 100,000-mile warranty and is purchased by auto shops, large motor pools in companies and governmental units, and some individual auto owners. The plant in Dayton, Ohio, specializes in the Ford V6 engine. Approximately 1,140 to 1,340 engines are rebuilt each month, and the costs of the plant are assigned to monthly production using weighted-average process costing. The current month began with a Work-in-Process Inventory of 460 engines, which were 50% complete for direct materials and 50% complete for conversion costs. The direct direct materials cost in beginning Work-in-Process was $153,600, while the conversion cost was $150,240. A total of 1,040 engines were completed and shipped out during the month, and total direct materials cost of $1,060,800 and conversion cost of $1,154,400 were incurred during the month. The ending Work-in-Process of 560 units was 50% complete for direct materials and 30% complete for conversion costs.
Required: Compute the cost per equivalent unit for direct materials and conversion for the month.
In: Accounting
For the past year, Coach, Inc., had a cost of goods sold of
$68,382. At the end of the year, the accounts payable balance was
$11,889.
How long on average did it take the company to pay off its
suppliers during the year? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Days’ sales in payables
days
In: Finance
For the past year, Coach, Inc., had a cost of goods sold of
$59,882. At the end of the year, the accounts payable balance was
$13,589.
How long on average did it take the company to pay off its
suppliers during the year? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Days’ sales in payables
days
In: Finance
According to CAPM, which of the following would increase a company's cost of equity if the company had origanlly calculated Ke using: Rf=1.5%, Beta = 1.31, and the market risk premium is 8%?
1- Increasing Beta
2- Increasing Rf
3- Decreasing Rf
4- Increasing the rick on the market
answer options -
a- 1 and 2
b- 1, 2, and 3
c- 2, 3, and 4
d- 1, 3, and 4
In: Finance
Trading securities are reported at _, and any changes from cost are reported as part of _.
A cost, net income
B fair value, net income
C cost, stockholders' equity
D fair value, stockholders' equity
Under the _ method, the balance in the stock investment is updated to reflect the investor's share of cash dividends received and proportionate share of net income or loss.
A cost
B equity
C consolidation
D debt
In: Accounting
The primary determinant of a firm's cost of capital is the firm's __________________.
debt-equity ratio of any new funds raised
marginal tax rate
pretax cost of equity
aftertax cost of equity
use of the funds raised
Pick the correct statement related to cost of debt from below.
A company's pretax cost of debt is based on the current yield to maturity of the company's outstanding bonds.
A company's pretax cost of debt is equal to the coupon rate on the latest bonds issued by the company.
A company's pretax cost of debt is equivalent to the average current yield on all of a company's outstanding bonds.
A company's pretax cost of debt is based on the original yield to maturity on the latest bonds issued by a company.
A company's pretax cost of debt has to be estimated as it cannot be directly observed in the market.
In: Finance