13. Which of the following statements is correct?
A. If the monopolist is earning a positive economic profit, it must be producing where price is greater than
average variable cost.
B. If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit
by selling fewer units at a higher price per unit.
C. When a monopolist produces where price equals the minimum of average total cost, it earns a positive
economic profit.
D. If the monopolist is earning a positive economic profit, it must be producing where MR = MC.
E. If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit
by selling more units at a lower price per unit.

14. Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5
per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about
this monopolist?
A. The monopolist is currently maximizing profits, and its total profits are $375.
B. The monopolist is currently maximizing profits, and its total profits are $300.
C. The monopolist is not currently maximizing profits; it should produce more units and charge a lower price
to maximize profits.
D. The monopolist is not currently maximizing profits; it should produce fewer units and charge a higher
price to maximize profits.

15. which of the following statements is (are) correct?
(x) Deadweight loss measures monopoly inefficiency.
(y) The deadweight loss associated with a monopoly occurs because the monopolist produces an output
level less than the socially optimal level.
(z) The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly price is
equal to both average revenue and marginal revenue.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

QUESTION 3

The following production information is provided for Ludicrow Productions related to the month of June 2017:

a. What is the Cost of Goods Manufactured?   

b. What is the Cost of Goods Sold?

QUESTION 4

Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $230,000, and direct labor costs to be $110,000. Actual overhead costs for the year totaled $300,000, and actual direct labor costs totaled $150,000.

a. What is the pre-determined overhead allocation rate?   %

b. What is the amount of applied overhead based on this rate and actual direct labor costs?

c. Was overhead underapplied or overapplied?   By how much?

QUESTION 5

The LaRose Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process, whereas direct materials are added at the beginning of the process.

During August, the company transferred 650,000 units of product to finished goods. The company started 990,000 units in August.

At the end of August, the work in process inventory consists of 450,000 units that are 60% complete with respect to conversion. Beginning inventory had $320,000 of direct materials and $214,000 of conversion cost. The direct material cost added in August is $1,320,000 and the conversion cost added is $1,845,000.

Beginning work in process consisted of 110,000 units that were 100% complete with respect to direct materials and 50% complete with respect to conversion. Of the units completed, 110,000 were from beginning work in process and 540,000 units were started and completed during the period.

***************************************************************************************************************************************************************************************

a. What were the total costs that were transferred out?

B. What were the total costs assigned to ending work in process inventory?

Income statements under absorption costing and variable costing

Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (160,000 units) during the first month, creating an ending inventory of 25,000 units. During February, the company produced 135,000 units during the month but sold 160,000 units at $570 per unit. The February manufacturing costs and selling and administrative expenses were as follows:

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

a. Prepare an income statement according to the absorption costing concept for February. Enter all amounts as positive numbers.

b. Prepare an income statement according to the variable costing concept for February. Enter all amounts as positive numbers.

c. What is the reason for the difference in the amount of Operating income reported in (a) and (b)?

Under the ––––– method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under  , all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory decreases, the ––––– income statement will have a lower Operating income.

Classique Designs sells a variety of merchandise, including school shoes for girls. The business began the last quarter of 2013 with 30 pairs of the “Aerosoles” brand at a total cost of $54,000. The following transactions, relating to the “Aerosoles” brand were completed during the quarter:

October 3 - Purchased 45 pairs of shoes at a cost of $1,900 each.

October 15 - Sold 55 pairs to Casually Elegant Ltd at a unit price of $2,780

October 26 - Purchased 70 pairs at a cost of $2,400 each but these were subject to a trade discount of 5%.

November 10 - Sold 60 pairs to Best City Store which yielded total sales revenue of $192,000.

November 14 - Owing to an increased demand for this brand, the manager of Classique purchased 80 additional pairs of the “Aerosole” brand at a unit cost of $2,500, but additionally there was a freight charge of $100 on each pair.

November 24 - Sold 60 pairs of shoes to Big Buy Company at a price of $3,600 each.

November 30 - A physical stock count on that date revealed that there were 42 pairs of the “Aerosoles” brand in the warehouse.

December 4 - Purchased 75 pairs of shoes at a total cost of $213,750.

December 15 - 5 pairs of the shoes purchased on December 4 were returned to the supplier as they were of the wrong description.

December 30 - Sold 70 pairs to Regal Ltd. at a unit selling price of $4,400.

All purchases were on account and received on the dates stated and Classique Designs uses the FIFO method to account for inventory.

Required:

i) Prepare a perpetual inventory record for Classique Designs, to determine the value of ending inventory at December 31, 2013, and the total amount to be assigned to cost of goods sold for the period.

ii) Calculate the gross profit for the period. iii) You are told that 15 of the units sold on November 24, 2013 were on account. State the journal entries necessary to record the transactions on November 14 and November 24, assuming the business uses the: - Periodic inventory system - Perpetual inventory system

Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 10%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $110 to purchase these supplies.

For years, Worley believed that the 10% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown:

Worley gathered the data below for two of the many hospitals that it serves—University and Memorial (each hospital purchased medical supplies that had cost Worley $39,000 to buy from manufacturers):

Required:

1. Compute the total activity costs that would be assigned to University and Memorial.

2. Compute Worley’s customer margin for University and Memorial. (Hint: Do not overlook the $39,000 cost of goods sold that Worley incurred serving each hospital.)

Please answer both.

High-Low Method for a Service Company

Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved.

Determine the variable cost per gross-ton mile and the total fixed cost.

Break-Even Sales and Sales Mix for a Service Company

Zero Turbulence Airline provides air transportation services between Los Angeles, California, and Kona, Hawaii. A single Los Angeles to Kona round-trip flight has the following operating statistics:

It is assumed that the fuel, crew salaries, and airplane depreciation are fixed, regardless of the number of seats sold for the round-trip flight.

a. Compute the break-even number of seats sold on a single round-trip flight for the overall enterprise product, E. Assume that the overall product mix is 10% business class and 90% economy class tickets.

b. How many business class and economy class seats would be sold at the break-even point?

You are given the sample mean and the population standard deviation. Use this information to construct the​ 90% and​ 95% confidence intervals for the population mean. Interpret the results and compare the widths of the confidence intervals. If​ convenient, use technology to construct the confidence intervals. A random sample of 60 home theater systems has a mean price of ​$118.00. Assume the population standard deviation is ​$19.60. Construct a​ 90% confidence interval for the population mean.

The​ 90% confidence interval is ​( nothing​, nothing​). ​(Round to two decimal places as​ needed.)

Construct a​ 95% confidence interval for the population mean.

The​ 95% confidence interval is ​( nothing​, nothing​). ​(Round to two decimal places as​ needed.)

Interpret the results. Choose the correct answer below

A. With​ 90% confidence, it can be said that the population mean price lies in the first interval. With​ 95% confidence, it can be said that the population mean price lies in the second interval. The​ 95% confidence interval is wider than the​ 90%.

B. With​ 90% confidence, it can be said that the sample mean price lies in the first interval. With​ 95% confidence, it can be said that the sample mean price lies in the second interval. The​ 95% confidence interval is wider than the​ 90%.

C. With​ 90% confidence, it can be said that the population mean price lies in the first interval. With​ 95% confidence, it can be said that the population mean price lies in the second interval. The​ 95% confidence interval is narrower than the​ 90%.

Do people eat more of a snack food when the food is labeled as low-fat? Do people pay attention to serving size? The answer may depend on whether the snack food is labelled low-fat and whether the label includes serving-size information. A study investigated these two questions using staff, grad students, and undergrad students at a large university as subjects.   
Subjects were asked to evaluate a pilot episode for an upcoming TV show at a theater on campus and were given a bag of granola from a respected campus restaurant. They were told to enjoy as much or as little of the granola as they wanted. Each granola bag had two labels: Twenty subjects were assigned to each treatment, and their granola bags were weighed at the end of the session to determine how much granola was eaten.

a) Is the study an observational study or an experiment? Specifically in this study (do not give general definitions),

what are the b) experimental units (abbreviated EU, also called individuals or subjects)

c) response variable and whether it is quantitative or categorical

d) How many factors were there and what were they?

e) How many treatments were there and what were they?

f) How many experimental units were in the study?

Microeconomics

Marginal Productivity and the Law of Diminishing Marginal Returns

You have recently been hired to manage a movie theater. You observe that there are many customers waiting around the concession area to buy snacks. You also observe that there is only one clerk working the counter. This employee has to do everything from get the popcorn going, stocking condiments and supplies, changing the soda canister when the syrup runs out for fountain drinks, helping customers, fill orders, collect cash, and of course, smile at the customers who have waited lengthy periods of time.

You obtain a report that shows the average sales per weekend night are $500 with one clerk. You decide to hire another clerk for the shift and sales increase to $1,000. You add one more clerk, and sales increase to $1,700. Again, you add another clerk, and sales increase to $1,900. Finally you add one more clerk, and sales increase to $2,000.

1.         Calculate the marginal product associated with each clerk. Draw a table to do this.

2.         At what point did the law of diminishing marginal return become evident?

3.         Why did the marginal product increase as more clerks were added initially?

4.         Why did the marginal product start to diminish?