A reduction in retained earnings of $2,950,000.
$37(500,000 x .14) = &2,590,000
The correct option for The firm enjoys economies of scope.
economies of scope exist if C(Q1, 0) + C(0, Q2) > C (Q1, Q2) (10 + 5Q1) + (10 + 5Q2) > 10 + 5Q1 + 5Q2 - 0.2Q12Q2.
Economies of scope is an economic theory stating that the average total cost of production decrease as a result of increasing the number of different goods produced. For example, a gas station that sells gasoline can sell soda, milk, baked goods, etc.
Economies of scope is a financial precept wherein a commercial enterprise's unit value to supply a product will decline because the form of its products will increase. In different words, the extra one of kind-but-comparable goods you produce, the lower the total cost to provide each one may be.
Your question is incomplete. Please read below for the missing content.
A firm can produce two products with the cost function C(Q1, Q2) = 10 + 5Q1 + 5Q2 - 0.2Q1Q2. The firm enjoys:
A. economies of scale in the two products separately.
B. economies of scope.
C. cost complementarity.
D. economies of scale in the two products separately and cost complementarity.
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Answer and Explanation:
The computation is shown below:
Total material cost variance
= (Standard quantity × standard price) - (actual quantity × actual price)
= (4,000 tiles × 2 pounds of material × $4) - (8,800 pounds × $35,640 ÷ 8,800 pounds)
= (8,000 pounds × $4) - ($8,800 pounds × $4.05)
= $3,640 unfavorable
For material price variance
= Actual Quantity × (Standard Price - Actual Price)
= 8,800 × ($4 - $4.05)
= $440 unfavorable
For material quantity variance
= Standard Price × (Standard Quantity - Actual Quantity)
= $4 × (8,000 pounds - 8,800 pounds)
= $3,200 unfavorable
The favorable variance is that in which the standard cost is more than the actual cost and the inverse goes to unfavorable variance
Answer:
Fixed cost
Explanation:
Variable costs are costs that change with change in the quantity of the goods or services produced by the business. For example the cost of raw materials.
Fixed costs are costs that do not change with change in the quantity of the goods or services produced by the business. For example interest payments.
In the given question, payment of $10 per pound has to be made no matter what the production level for the year, so this is an example of <u>fixed cost</u>
