Answer:
Incremental net income from further processing is $566,600
Explanation:
First of all, it would be necessary to compute profit from selling the product at cut off point and profit when it is further processed in order to determine whether or not it is worth processing further:
Sales revenue $400,000
cost of production(19,000*$25) $475,000
Loss from selling ($75,000)
Further processing:
sales revenue
Product B(5200*$108) $561,600
Product C(11,000*$55) $605,000
Total revenue $1,166,600
total cost
cost of production ($475,000)
cost of further processing ($200,000)
total costs ($675,000)
Profit $491600
By further processing the incremental net profit is $566,600
($491,600-(-$75000)
Costs vs. Benefits is the economic principle that people are motivated by something to take a particular course of action. Hence, option A is correct.
<h3>What is
Breakeven analysis?</h3>
A financial accounting method or technique called breakeven analysis is used to calculate the number of units a business needs to sell at a given price in order to cover all of its costs.
It is a notion that enables entrepreneurs or financial professionals to figure out and know what they must sell either monthly or annually in order to be able to meet the costs of operating the firm.
Thus, option A is correct.
For more details about Breakeven analysis, click here:
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Answer:
It could take a long time for prices to adjust by market forces alone.
Explanation:
Based on the information provided within the question it can be said that the the government would want to do this mainly due to the fact that It could take a long time for prices to adjust by market forces alone. Therefore by using expansionary fiscal policy they would speed this process up and get prices adjusted in a much shorter time-frame.
E S ( elasticity of supply ) = .5 ( supply is inelastic: E S < 1 )
The formula is:
E S = Δ Q / Δ P * P / Q,
where: Δ Q is the change in quantity, Δ P is change in price, P is initial price and Q is initial quantity.
.5 = Δ Q / 25 * 50 / 100,000
Δ Q = .5 * 25 * 100,000 / 5
Δ Q = 25,000
Quantity at the new price: Q ( new ) = 100,000 + 25,000 = 125,000
Answer:
Supply-side economies of scale
Explanation:
This term refers to the advantages that can be obtained from long-term production. The idea is simple and has to do with costs.
We will say that a company obtains economies of scale when, from a certain volume of production, the unit costs are reduced since they do not increase in the same proportion.
Let's say, for example, a bread manufacturing and selling company. Its daily production entails a series of costs (salaries, taxes, rents, raw material, service) that can be divided between fixed costs and variable costs.
The company will sell the fixed costs one or infinite bars, but once they are covered and their share of the variables (the dead center) the company will start to have benefits.
From that moment on, each unit sold should only cover its fixed costs and although a volume makes new costs (more supplies or more workers) necessary, they always grow less than the benefits. This is an economy of scale.
