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3 years ago

A variable cost

Business

1 answer:

olchik [2.2K]3 years ago

4 0

Answer:

b. changes in the same direction and in direct proportion to changes in operating activity.

Explanation:

Variable costs rise whenever production increases and falls whenever it decreases. This relationship shows that variable cost is a direct function of production volume. Examples are labor, packaging, raw materials, as these are utilized in a company's manufacturing process.

They are different from fixed costs as the latter remain the same irrespective of the volume of production your business generates. Fixed costs are also predetermined ,hence remain the same throughout a specific period.

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3 years ago

Firm A is being acquired by Firm B for $35,000 worth of Firm B stock. The incremental value of the acquisition is $2,500. Firm A

LekaFEV [45]

Answer:

option (b) $34,789

Explanation:

Data provided in the question:

Worth of Firm A = $35,000

Incremental value of the acquisition = $2,500

Number of shares of Firm A outstanding = 2,000

Price of Firm A shares = $16 per share

Number of shares of Firm B outstanding = 1,200

Price of Firm B shares = $40 per share

Now,

Number of shares issued = Worth of Firm A ÷ Price per share of Firm B

= $35,000 ÷ $40

= 875 shares

Value per share after merger

= [ (1,200 × $40) + ( 2,000 × $16 ) + $2,500 ] ÷ [ 1,200 + 875 ]

= $82,500 ÷ 2,075

= $39.759

Therefore,

The Actual cost of acquisition

= Number of shares issued × Value per share after merger

= 875 × $39.7588

= $34788.95 ≈ $34,789

Hence,

The answer is option (b) $34,789

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3 years ago