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11Alexandr11 [23.1K]
3 years ago
11

To maximize profits, firms produce an output where marginal product of labor per dollar equals the marginal product of capital p

er dollar. Assume that the cost of labor is $20 an hour and its marginal product is 40. What should the marginal product of capital be if we assume the cost of capital of $40 an hour?
Business
1 answer:
STALIN [3.7K]3 years ago
7 0

Answer:

$80

Explanation:

In this company, every dollar spent in labor has equal marginal product than every dollar spent in capital.

If we spent an additional $20 in labor and the marginal product output is $40, it is a 1:2 relationship (for every dollar spent in labor we get $2 of product output).

If the company spends $40 in capital, if it has the same marginal product output as labor (1:2 relationship), then its marginal product output will be $80.

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The following is the adjusted trial balance for Nadia Company. Nadia Company Adjusted Trial Balance December 31 Account No. Debi
muminat

Answer:

Net Income = $2,980

Statement of owner's equity = $15,280

Total Assets = $19,050

Total Liabilities = $3,770

Explanation:

Requirement A) Income Statement

                                 Nadia Company

                               Income Statement

                For the Year Ended December 31, 20X9

Revenues:                                        $                               $

Fees Earned                                                                 10,930

Expenses:

Wages expense                           2,450

Rent expense                               1,900

Utilities expense                           1,475

Depreciation Expense                  1,150

Miscellaneous Expense            <u>      975</u>

Total Expenses                                                         <u>     </u><u>(7,950)</u>

Net Income                                                                <u>    2,980</u>

Nadia company's total revenue exceeds the total expenses, therefore, the company earns a net income of $2,980.

Requirement B) Statement of owner's equity

                                        Nadia Company

                                Statement of Owner's Equity

                      For the Year Ended December 31, 20X9

           Particulars                                               $

Beginning Capital                                           10,000

Add: Additional investment (Capital)              3,000

Add: Net income for the year                          <u>2,980</u>

                                                                        15,980

Less: Drawings                                                 <u>   700</u>

Capital, December 31 (Ending Capital)        <u>  15,280</u>

The amount of $15,280 is the total owner's equity for the company. The company will this amount in the balance sheet as well.

Requirement C) Balance Sheet

                                        Nadia Company

                                         Balance Sheet

                                  As At December 31, 20X9

Particulars                                         $                               $

                              Assets

<u>Current Assets</u>

Cash                                                5,130

Accounts Receivable                     3,300

Prepaid Expenses                            420

Total Current Assets                                                      8,850

<u>Property, Plant, and Equipment</u>

Equipment                                       12,400

Less: Accumulated Depreciation  (2,200)

Total Property, Plant, and Equipment                    <u>     </u><u>10,200</u>

Total Assets                                                                    19,050

           Liabilities & Owner's Equity

                          Liabilities

Current Liabilities

Accounts Payable                               700

Notes Payable (Short-term)        <u>     3,070</u>                              

Total Liabilities                                                                 3,770

                      Owner's Equity

Owner's Equity (From requirement B)                  <u>        15,280</u>

Total liabilities and owner's equity                              19,050

Therefore, <em>Total Assets = Total Liabilities + Owner's Equity</em>

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Jill needs to pay the web developer who created a new website for her brokerage, but her checking account is low, so she floats
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