The managers at johnson & johnson who authorized the buyback of defective products might have endorsed milton friedman’s sha
1 answer:
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Answer:
price equals average total cost.
Explanation:
Normal profit exists basically when economic profit = $0. Economic profit is not the same as accounting profit. Accounting profit just considers revenues - actual expenses. While economic profits considers accounting profit - implicit or opportunity costs. Opportunity costs are the extra costs or benefits lost from choosing one activity or investment over another alternative.
A company will maximize its accounting profits when economic profit = $0. This will happen when marginal revenue = marginal costs. All companies should try to sell at this level of output and price, but since the monopoly is being regulated, the price will probably be set considering total costs, not marginal costs.
In the attached graph you can find the point that maximizes profit at (Q,P), but the marginal cost then increases more than total costs. That is why regulators will probably use the average total cost as reference for setting the output for a monopoly.
Answer:
lease receive = $76441 ( debit entry )
cost of goods sold value = $42178 (debit entry )
equipment cost is = $45,000 ( credit entry )
sales revenue is = $73,619 (credit entry )
Explanation:
Given data
leased equipment costing = $45,000
lease agreement @ six annual payments = $15,000
present value of the annual lease payments = $73,619
residual value = $5,000
present value residual value = $2,822
to find out
journal entry recorded by Manlier at the beginning of the lease
solution
first we calculate lease receive that is debit entry
lease receive = present value of the annual lease payments + present value residual value
lease receive = 73619 + 2822
lease receive = $76441 ( debit entry )
now we calculate cost of goods sold value i.e
cost of goods sold value = leased equipment costing - present value residual value
cost of goods sold value = 4500 - 2822
cost of goods sold value = $42178 (debit entry )
equipment cost is = leased equipment costing = $45,000 ( credit entry )
sales revenue is = present value of the annual lease payments = $73,619 (credit entry )
