If the price of the item is $15.00 per unit and the employees costs $125 each, Three employees should the firm hire to maximize their profit.
How do firms maximize profit?
All firms maximize profits when their marginal cost is equal to the marginal product. This dollar amount should also be the selling price that maximizes profits.
What is meant by profit maximization?
Profit maximization is a process business firms undergo to ensure the best output and price levels are achieved in order to maximize its returns. Influential factors such as sale price, production cost and output levels are adjusted by the firm as a way of realizing its profit goals.
What are the goals of profit maximization?
Profit maximization is the process by which a business arranges its prices and cost structure to achieve the highest possible profit. The central goal of the organization is to increase its profits
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Answer:
1. Requires substantial resources.
2. produces different numbers than a traditional system.
3. Is costly to maintain.
Explanation:
Activity-based costing (ABC) system is a method of accounting assigns the total cost of activities such as manufacturing overhead costs and indirect costs necessary to produce a product or provide a service.
Basically, an activity-based costing (ABC) system is focused on the cost drivers associated with the respective activities, which are responsible for cost to be incurred. The cost drivers are activities such as direct labor, purchase order, machine use etc.
<em>Hence, an activity-based costing system requires substantial resources, produces different numbers than a traditional system and is costly to maintain.</em>
