Answer: a. $4,000
b. $5,000
Explanation:
a. If she can sing at each wedding but decides to maximise profits, she will only sing at the weddings of those paying her $200 as it is the higher of the two payment options.
Should she sing at the $200 customer weddings, she would make;
= 20 people * $200
= $4,000
b. Price Discrimination is the charging of different types of customers different prices for the same or similar goods.
If your friend knows how to perfectly charge the two different groups the different prices that they value her at then she will be able to attend and sing at both weddings making her revenue;
= (10* $100) + (20 * $200)
= 1,000 + 4,000
= $5,000
Answer: D. $6,000
Explanation:
Given the following :
Activity cost pool
- - - - - - - - - - - - - - - - - - Machining Order Filling Other
Equipment depreciation 0.40 - - - - - 0.10 - - 0.50
Supervisory expense - - 0.20 - - - - - 0.30 - - 0.50
First stage allocation:
Overhead cost
Equipment depreciation - $51,000
Supervisory expense - $3000
Order filling:
Equipment depreciation - $51,000 × 0.1 = $5100
Supervisory expense - $3000 × 0.3 = $900
Total overhead - $( 5100 + 900) = $6,000
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