Answer: $36,000 increase.
Explanation:
Cost of keeping Current Truck.
The cost of keeping the current truck will be the Opportunity Cost of not purchasing the New truck.
The New truck is capable of reducing Manufacturing costs by $25,000 a year for 5 years so,
Cost of Keeping Current Truck = 25,000 * 5
= $125,000
Cost of buying new truck
It is given that if the company trades in the old truck they get a $31,000 reduction.
The Cost Price of the new truck is therefore,
= 120,000 - 31,000
= $89,000
The difference between the costs will be,
= 125,000 - 89,000
= $36,000
If buying a new truck will reduce expenses by $36,000 then that means it will increase income by $36,000.
The costs of sauce, dough and electricity increase, because these are variable costs.
Variable costs are costs that change with the level of output. When output increases, variable costs increases and when output declines, variable cost decreases. When the demand for pizza increases, variable input would increase and this would increase variable costs.
On the other hand, fixed costs are costs that do not variable with the level of output.
To learn more about variable cost, please check: brainly.com/question/25879561
Answer:
Purchases= $3,620
Explanation:
Giving the following information:
Beginning inventory= $720
Ending inventory= $640
Purchase= ?
Used in the period= $3,700
<u>To calculate the purchases, we need to use the following formula:</u>
Purchases= used in the period + desired ending inventory - beginning inventory
Purchases= 3,700 + 640 - 720
Purchases= $3,620
