<span>As the volume of financing increases, the costs of the various types of financing will increase, raising the firms weighted average cost capital. This happens because the firm will have to pay more in fees for their financing an that will be passed on to the firms weighted average cost capital.</span>
When the price of the good is fixed at a level below the current (equilibrium) price, there will be a shortage of the good and the good will have to be effectively rationed. As in the question above, the consumer is worse off because she is not able to attain her utility maximizing point.
Investors would be the answer
Answer: Rework the phones
Explanation:
The phones have already been produced so the cost price of $70 does not matter as it is a sunk cost.
The decision the company makes between scrap and reworking will depend on which option bring in more money.
Scrap = $39
Reworking:
= Price after reworking - Cost to rework
= 146 - 82
= $64
Incremental income of reworking over scrap:
= 1,075 * (64 - 39)
= $26,875
<em>Signal makes an incremental income of $26,875 if they rework the phones so they should do that. </em>
Answer:
D) $30,000
Explanation:
To calculate the prime cost per unit we can use the following formula:
prime cost per unit = direct materials per unit + direct labor per unit = $26
We were given the total direct materials, so to determine the direct per unit we divide that by the total units produced: $100,000 / 5,000 units = $20
direct labor per unit = prime cost per unit - direct materials per unit
direct labor per unit = $26 - $20 = $6
Now to calculate the total labor cost we multiply the direct labor per unit ($6) times 5,000 units = $30,000
