Suppose there are only two Low-Cost airlines in a country: The Flash Airlines and the Burraq
Airlines (duopoly). Both airlines target leisure travelers which is the reason why they keep
their fares low (considering the high Price Elasticity of Demand of leisure travelers).
A) Read the following instructions carefully: 2 Marks
a. Treat the Flash Airlines as the Row Player and the Burraq Airlines as the Column
Player.
b. The two available strategies are:
i. Low Prices
ii. High Prices
Each of them naturally must select one of these strategies.
c. When they both charge a Low Price, they manage to attract many customers. In
this case, each of them reports same level of profit.
d. When they both charge a High Price, they lose a lot of customers. Each of them
still reports same level of profit but lesser that what they were making when they
both pursued ‘Low Price’ strategy.
e. If Flash charges a High Price but Burraq charges a Low Price, Flash incurs a loss
and Burraq incurs a phenomenal profit (its highest profit in the entire matrix).
f. If Flash charges a Low Price but Burraq charges a High Price, Flash makes a
phenomenal profit (its highest in the entire matrix) and Burraq incurs a loss.
Now, construct a pay-off matrix using the instructions above. Create your numbers
keeping in mind the instructions above. Do proper labelling of the pay-off matrix.

B) Does ‘The Flash Airlines’ have a dominant strategy? If Yes, name that strategy. 2 Marks
C) Does ‘The Burraq Airlines’ have a dominant strategy? If yes, name that strategy. 2Marks
D) What is the “Nash Equilibrium” of your game?

Suppose there are only two Low-Cost airlines in a country: The Flash Airlines and the Burraq
Airlines (duopoly). Both airlines target leisure travelers which is the reason why they keep
their fares low (considering the high Price Elasticity of Demand of leisure travelers).
A) Read the following instructions carefully: 2 Marks
a. Treat the Flash Airlines as the Row Player and the Burraq Airlines as the Column
Player.
b. The two available strategies are:
i. Low Prices
ii. High Prices
Each of them naturally must select one of these strategies.
c. When they both charge a Low Price, they manage to attract many customers. In
this case, each of them reports same level of profit.
d. When they both charge a High Price, they lose a lot of customers. Each of them
still reports same level of profit but lesser that what they were making when they
both pursued ‘Low Price’ strategy.
e. If Flash charges a High Price but Burraq charges a Low Price, Flash incurs a loss
and Burraq incurs a phenomenal profit (its highest profit in the entire matrix).
f. If Flash charges a Low Price but Burraq charges a High Price, Flash makes a
phenomenal profit (its highest in the entire matrix) and Burraq incurs a loss.
Now, construct a pay-off matrix using the instructions above. Create your numbers
keeping in mind the instructions above. Do proper labelling of the pay-off matrix.

B) Does ‘The Flash Airlines’ have a dominant strategy? If Yes, name that strategy. 2 Marks
C) Does ‘The Burraq Airlines’ have a dominant strategy? If yes, name that strategy. 2Marks
D) What is the “Nash Equilibrium” of your game?

How do bonds influence the cost of capital for a company?(Discuss with reference to the WACC)

Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companies use activity-based costing (ABC) which uses multiple drivers (items that consume resources) rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship in its applied overhead costs.

Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. The activities listed below area sample of possible cost pools for Waterways.

Using the following information, determine the overhead rates and the actual cost assigned for each of the activity cost pools in a possible ABC system for Waterways. (Round answers to 2 decimal places, e.g. 12.25.)

eTextbook and Media

How would you classify each of the following activities by level—unit level, batch level, product level, or facility level?

Zankel Incorp is considering replacing its old machine with a new machine. The cost of a new machine is RM 300,000 with a useful life of 4 years. The machine has an estimated salvage value of RM 45,000. The cost of installing this new machine will be RM 20,000. In the initial period, RM 125,000 in net working capital is required and to be recovered at the ending life of the machine. The company was using the present machine for 4 years and it has a remaining useful life of 2 years. The machine was bought at RM 200,000 and has a salvage value of RM 20,000. Currently, the machine can be sold at RM 90,000 and normally the company adopts straight- line method as a depreciation strategy. The new machine is expected to result in changes as follows:

• Increase in annual sales by RM 80,000.

• Reduction in annual defect cost by RM 6,000.

• Increase in annual operating cost by RM20,000

If corporate tax is 30%, the capital gain tax rate is 15%, and the required rate of return is 10%, determine:

a) Determine the cost of asset for the new machine

b) Determine the annual depreciation for the new machine

c) Determine the annual depreciation for the present machine

d) Determine the book value for the present machine at year 2

e) Determine the tax liability for the present machine

f) Determine the net initial cash outlay

g) Determine the net annual cash flows

h) Determine the net terminal cash flows

I) Determine the net present value for the new machine

j) What is the replacement decision for the company

Chester has negotiated a new labor contract for the next round that will affect the cost for their product City. Labor costs will go from $2.57 to $3.07 per unit. Assume all period and variable costs as reported on Chester's Income Statement remain the same. If Chester were to pass on half the new labor costs to their customers, how many units of product City would need to be sold next round to break even on the product?

Income Statement

Fixed Cost is same as Period Cost ?

Duluth Ranch, Inc. purchased a machine on July 1, 2018. The cost of the machine was $34,000. Its estimated residual value was $10,000 at the end of an estimated 5-year life. The company expects to produce a total of 20,000 units. The company produced 2,500 units in 2018 and 3,200 units in 2019.

Required:

Part A - Calculate depreciation expense for 2018 and 2019 using the straight-line method.

Part B - Calculate the depreciation expense for 2018 and 2019 using the units-of-production method.

Nobel Tech Inc. is building a new production line. The cost of the production line is $3 million in the current year and $2 million in the following year. The production line is expected to bring in cash inflow of $1.6 million in year 2, and $2 million each year from year 3 to year 7. The company uses a cost of capital of 10% on all the projects.

The IRR of the project is closest to ___________.

Group of answer choices

a. 27%

b. 24%

c. 17%

d. 18%

Find the labor cost to produce 40 cellphones if the time needed to produce the first cell phone is 120 hours and learning rate is 90%. Assume the labor wage is $11/hour. please work it in excel