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Marizza181 [45]
3 years ago
10

"Mrs. Smith operates a business in a competitive market. The current market price is $8.10. At her profit-maximizing level of pr

oduction, the average variable cost is $8.00, and the average total cost is $8.25. Mrs. Smith should"
Business
2 answers:
STALIN [3.7K]3 years ago
8 0

Answer:

Mrs.Smith should continue to operate the business in the short run but shut down in the long run.

Explanation:

According to the shut down rule, at the profit-maximizing positive level of output, a business in a competitive market should continue to operate in the short-term if the price equals to or is greater than the average variable cost, but should shut down in the long term if the price is less than or equal to total cost. Here,

price = $8.10

avg variable cost = $8.00

avg total cost = $8.25

Mrs.Smith should continue to operate the business in the short run but shut down in the long run.

algol133 years ago
4 0

Answer:

Short-run continue to operate Long turn. decreases cost or leave the market

Explanation:

Mrs Smith will shut-down the business if it cannot cover their variable cost given the current selling price ( This means, given Mr Smith cost structure it cost more to produce it that than to purchased it)

gross profit ( check if profitable in the long-run)

sales price $8.10 - $8.25 total variable cost= -0.15 producing a unit in the current cost structe generates losses for 15 cent in the bottom line

contibution ratio (check for wheather the product is profitable or not in the short run)

sales price $ 8.10 - $ 8.00 variable cost = $0.10 contribution

As the product generates a contribution their volume makes the bottom of the line better If we don't produce it we are going to decrease our losses even more.

<em><u>We have to produce and improve our situation by some of these measurements:</u></em>

  • decrease our variable cost (anytime)
  • decrease our fixed cost (in the long turn as currently are fixed)
  • increase selling price if possible

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Matulis, Inc., a calendar year C corporation, owns a single asset with a basis of $325,000 and a fair market value of $800,000.
Talja [164]

Answer:

$99,750

Explanation:

Matulis's taxes are = (asset's fair market value - asset's basis) x corporate tax rate = ($800,000 - $325,000) x 21% = $475,000 x 21% = $99,750

Since the C corporation is turning into a S corporation it must recognize the gain on holding the asset. The Tax Cuts and Jobs Act set the corporate tax rate at 21%.

3 0
3 years ago
Ben Palman owns an art gallery. He accepts paintings and sculpture on consignment and then receives 20% of the price of each pie
Elan Coil [88]

Answer:

1. The cost formula for the gallery's costs for a year would be Total cost=$80,000+$500X

2. The total cost for Ben in a year with 12 opening shows Using the cost formula developed is $86,000

Explanation:

1. According to the given data the cost formula for the gallery's costs for a year would be as follows:

Total cost=Fixed costs+Variable costs for the level of activity

Total cost=$80,000+$500*number of opening shows

Total cost=$80,000+$500X

2. The total cost for Ben in a year with 12 opening shows Using the cost formula developed above would be as follows:

Total cost=$80,000+$500X

Total cost=$80,000+$500*12

Total cost=$80,000+$6,000

Total cost=$86,000

3 0
3 years ago
p. 82) Which of the following is NOT a limitation of SWOT (Strengths, Weaknesses, Opportunity, Threats) analysis? A. Organizatio
PilotLPTM [1.2K]

Answer:

The correct answer is letter "B": SWOT's focus on the external environment is too broad and integrative.

Explanation:

The SWOT analysis is a study of the internal and external factors that influence companies' operations and from which the entity can take advantage of or steps to control risks. The <em>internal factors</em> are the Strengths and Weaknesses while the <em>external components</em> are the Opportunities and Threats of the firm.

<em>The SWOT's focus on the external environment is broad and integrative but such characteristic represents an advantage not a limitation of this strategic study.</em>

3 0
2 years ago
In 2016, Chartres Inc., issued for $105 per share, 60,000 shares of $100 par value convertible preferred stock. One share of pre
faltersainse [42]

Answer:

Total amount should be credited to additional paid-in capital from common stocks as a result of the conversion of the preferred stock into common stock: $1,800,000 .

Explanation:

Please find the detailed calculations and explanations as below:

Total Cash amount received from preferred share issuance: 105 x 60,000 = $6,300,000;

The $6,300,000 will be credited into two owner's equity account:

- Common equity = Par value of common stock at the issuance of preferred stock date x Number of preferred stocks issued x Number of common stocks that one preferred stock has the right to converted into = 25 x 60,000 x 3 = $4,500,000.

- Paid-up capital account = Amount of cash receipt ( recorded as Debit) - Amount of common equity ( recorded as Credit) = 6,300,000 - 4,500,000 = $1,800,000 .

6 0
3 years ago
Barnegat Light sold 100,000 shares in an initial public offering. The underwriter's explicit fees were $50,000. The offering pri
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The best estimate of the total cost to Barnegat Light of the equity issue will be $1,050,000.

In addition to the explicit fees of $50,000, we should also take into account the implicit cost incurred to Barnegat Light from the underpricing in the IPO. The underpricing is $10 per share, implying total costs of $1,000,000.

Calculation for What is the best estimate of the total cost to Barnegat Light of the equity issue-:

Total cost = $50,000 + ($30 - $20)1,000,000 shares

Total cost = $50,000+($10)1,000,000 shares

Total cost = $50,000+$1,000,000

Total cost =$1,050,000

Therefore the best estimate of the total cost to Barnegat Light of the equity issue will be $1,050,000.

Learn more about Initial Public Offering (IPO)on:

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5 0
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