A firm can sell pills in two countries; the pills cost fifty cents each to produce and sell. Demand in country A is Q = 10 – P. Demand in country B is Q = 10 – 2P. The firm must sell an integer amount of pills. Determine the following: (a) Total quantity sold and total profits of the firm if it employs third degree price discrimination. (b) Total quantity sold and total profits of the firm if it does NOT employ price discrimination. (You must show or explain your calculations to get any credit for your answers.)
In: Economics
Section A: This section carries 10 points
A certain type of computer costs $1,000, and the annual holding cost is 25% of the value of the item. Annual demand is 10,000 units, and the order cost is $150 per order. What is the approximate economic order quantity? What is the total inventory cost?
Section B: This section carries 10 points
What is the difference between continuous review system and periodic review system?
In: Operations Management
Fixed Price Incentive Fee Calculation. In this fixed price incentive fee contract, the target cost is estimated at $150,000 and the target fee is $30,000. The project is over, and the buyer has that the costs were, in fact, $210,000. Because the seller's cost came in higher than the estimated costs, the seller shares in the added cost: 60% to the buyer and 40% to the seller. The ceiling price is $200,000. Calculate the point of total assumption.
$183,333
In: Finance
Why would a firm decide to produce a positive quantity of a output even though it makes negative profits by doing so?
A.
Because the price is high enough to cover the average fixed cost.
B.
Because the price is high enough to cover the average total cost.
C.
Because the price is high enough to cover the average variable cost.
D.
A firm would never produce when profit is negative.
In: Economics
Farmer Brown planted com and wheat on his 1120 acres of land. The cost of planting and harvesting corn (which includes seed, planting, fertilizer, machinery, labor and other costs) is $270 per acre. The cost of planting and harvesting what is $140 por acre. If Farmer Brown's total cost was $237,400, how many acres of com did he plant?
Farmer Brown planted _______ acres of com
In: Math
A firm produces Planes and Boats using the same machines and workers. The multi product total cost of producing Planes units H and Boats units S is given by
TC = xH + yS - zHS
where x, y, and z are positive.
In: Economics
Assume that XYZ Corporation is a leveraged company with the following information: Kl = cost of equity capital for XYZ = 13 percent i = before-tax borrowing cost = 8 percent t = marginal corporate income tax rate = 30 percent Calculate the debt-to-total-market-value ratio that would result in XYZ having a weighted average cost of capital of 9.3 percent and 13 percent respectively
In: Finance
| Store | Travel Time Each Way (Minutes) | Price of a Suit (Dollars per suit) |
|---|---|---|
| Local Department Store | 15 | 100 |
| Across Town | 30 | 86 |
| Neighboring City | 60 | 63 |
Complete the following table by computing the opportunity cost of Juanita's time and the total cost of shopping at each location.
| Store | Opportunity Cost of Time (Dollars) | Price of a Suit (Dollars per suit) | Total Cost (Dollars) |
|---|---|---|---|
| Local Department Store | 100 | ||
| Across Town | 86 | ||
| Neighboring City | 63 |
Assume that Juanita takes opportunity costs and the price of the suit into consideration when she shops. Juanita will minimize the cost of the suit if she buys from the _______.
In: Economics
A plant is to be built to produce blasting devices for construction work, and the decision must be made as to the extent of automation in the plant. Additional automatic equipment increases the investment costs but lowers the probability of shipping a defective device to the field, which must then be shipped back to the factory and dismantled at cost of $10 per device. The operating costs are identical for the different levels of automation. It is estimated that the plant will operate 10 years. The interest rate is 20%, and the rate of production is 100,000 devices per year for all levels of automation. Prepare a table with a column for all possible levels of automation, a column for the expected number of defectives in 100,000 devices, a column for the expected annual cost of defectives, a column for the annual cost of investment and a column for the total expected annual cost. Using the table, find the level of automation that will minimize the expected total annual cost for the investment costs and the probabilities given below
Level of Automation, Probability of producing a defective, Cost of investment ($)
1 0.100 100,000
2 0.050 150,000
3 0.020 200,000
4 0.010 275,000
5 0.005 325,000
6 0.002 350,000
7 0.001 400,000
In: Statistics and Probability
A company manufactures two products, P and Q. Monthly data relating to production and sales are as follows.
| Product P | Product Q | |
| Direct materisl cost per unit | $40 | $50 |
| Direct labor hours per unit | 2 hours | 4 hours |
| Direct labor cost per unit | $50 | $100 |
| Sales demand | 200 units | 900 units |
Production overheads are $200,000 each month and are absorbed on a direct labor hour basis.
There are five main areas of activity that can be said to consume overhead costs. The management accountant has gathered the following monthly information:
| Activity | Total cost $ | Cost driver | Total | P | Q |
| Set up | 60,000 | Number of setups | 6 | 2 | 4 |
| Machining | 120,000 | Machine hours | 6,000 | 600 | 5,400 |
| Order handling | 80,000 | Number of orders | 4 | 1 | 3 |
| Quality control | 40,000 | Number of inspections | 5 | 1 | 4 |
| Assembly | 20,000 | Assembly hours | 2,000 | 500 | 1,500 |
| 320,000 |
Calculate the per unit cost (prepare the cost card), for Product P and Q, using
In: Accounting