Answer: A) is the increase in total cost resulting from producing one more unit.
Explanation:
Marginal cost is the increase in total cost that a company incurs from producing one more unit of the good being produced. It includes both fixed and variable cost and can be calculated by dividing the change in cost by the change in quantity.
Marginal cost is an important metric in profit maximisation because it tells the point where profit is maximised when it equals Marginal revenue.
Answer:
Option 2 should be selected
Explanation:
Using a rational approach which option most benefit and have a minimum cost. We will use the break-even level here to decide which option should be selected.
Option 1
Price per call = $30
Variable cost per call = $18
Contribution = Sales - Variable cost = $30 - $18 = $12
Fixed Cost = $15,000
Break-even point = Fixed cost / Contribution per call = $15,000 / $12 = 1,250 calls
Option 2
Price per call = $30
Variable cost per call = $18 + ( $30 x 10% ) = $18 + $3 = $21
Contribution = Sales - Variable cost = $30 - $21 = $9
Fixed Cost = $9,000
Break-even point = Fixed cost / Contribution per call = $9,000 / $9 = 1,000 calls
Difference = 1,250 calls - 1,000 calls = 250 calls
Option 2 is better option because it take 250 less calls to reach at break-even in the month. It should be selected.
Answer:
Cullumber Company
The depreciation expense for machine 2 in 2016 is:
$16,200
Explanation:
a) Data and Calculations:
Machine Acquired Cost Salvage Value Useful Life Depreciation
(in years) Method
1 Jan. 1, 2015 $134,000 $34,000 10 Straight-line
2 July 1, 2016 81,000 11,100 5 Declining-balance
3 Nov. 1, 2016 77,500 8,500 6 Units-of-activity
Total machine hours expected = 34,500
Actual hours of use in the first 3 years were:
2016 730
2017 5,900
2018 7,600
Double-declining method:
Depreciation expense for machine 2 = $16,200 ($81,000 * 40% *6/12)
Answer:
Break-even point (dollars)= $5,112,222.22
Explanation:
Giving the following information:
Selling price= $640
Unitary variable cost= $352
Fixed costs= 985,500
Desired profit= $1,315,000
<u>To calculate the sales in dollars to be sold, we need to use the following formula:</u>
Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio
contribution margin ratio= (640 - 352) / 640= 0.45
Break-even point (dollars)= (985,500 + 1,315,000) / 0.45
Break-even point (dollars)= $5,112,222.22
