Economics is the study of how individuals and societies make choices under the condition of scarcity.
<h3>What is economics?</h3>
The study of how individuals use resources and respond to incentives by using it in decision-making is known as Economics. It is a vast study that helps us comprehend past trends, analyze current headlines, and forecast future events.
It signifies that the price of the product or service exceeds the supply of that product or service. As a result, scarcity might limit the options available to customers, who make up the economy in the end.
Individuals, organizations, and governments all use economics to understand their behaviors and decisions. It gives people a way to comprehend how people interact in a market-driven society and to analyze how government policies affect them.
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Answer:
The increase in pre-tax income 20,000
Explanation:
The fixed cost of production would remain the same whether or not the special order is taken, hence, irrelevant for the decision at hand.
The sale price for the special order=10
the variable cost per unit=6
contribution margin per unit from special order=10-6=4
The increase in pre-tax income=total contribution margin from special order
The increase in pre-tax income=5000*4
The increase in pre-tax income=20,000
Hence, accepting the order is worthwhile.
C is your answer (ik it’s likely a little late now, but this will help others who need it♂️)
Answer:
Explanation:
Under GAAP, every cost incurred should be classified into either period cost or product cost, where:
Product Cost:
The cost business has incurred right now, but will benefit from it in future for e.g. raw materials used to manufacture something which will be sold in next period (by the way period means the time span for which business is reporting its performance like year or quarter). these generally include direct labor, materials and manufacturing over heads
these costs should be capitalized and expensed out in future as the inventory is used.
Period Cost:
all other costs from which business has benefited completely in current period, including admin sales and distribution related costs
these should be expensed out in current period.
for warehousing costs, if they pertain to raw materials and semi finished goods they will be capitalized but if they pertains to finished goods they will be expensed out (as there is no benefit expected from them in future now)
for research and development, every research cost should be expensed out for e.g. feasibility studies under GAAP, but if product found to be commercially viable then the development costs can be capitalized as intangible asset(with the same logic as these will be exactly like manufacturing costs for tangible products).
