Answer:
The firm's debt-equity ratio is 0.87
Explanation:
RE = 0.18 = 0.146 + (0.146 - 0.084)*D/E*(1 - 0.37)
0.18 -0.146 = 0.062*DE*0.63
0.034 = 0.03906*DE
D/E = 0.87
Therefore, The firm's debt-equity ratio is 0.87
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Answer:
Falling long-run average cost curve.
Explanation:
A firm encountering economies of scale over some range of output will have a falling long-run average cost curve because the firm uses the lowest or most efficient cost per unit at each level of production. Economies of scale in business management refers to the process when there's an increased level of production (more units of goods or services can be produced), yet with fewer input or proportionate savings costs.
Also, The long-run average cost (LRAC) curve represents the firm's lowest cost per unit at each level of production, assuming the factors of production chosen are variable and thus, being the optimal factor of production mix.
Hence,The falling long-run average cost (LRAC) is in essence an advantageous or efficiencies in cost or production that results in increased level of output for a firm.
Answer: Whether the costs are variable or fixed and whether they are directly traceable to the responsibility center.
Explanation:
The Responsibility Income Statement is one where the different centers in a business have their own sub income statement so that the activities of each center and their profitability is measured and monitored.
In this statement, costs are classified as Variable and Fixed so it is important that it is known whether the costs are variable or fixed.
As the statements are per center, the costs in them would have to be only those that are directly traceable to that center so that a truer reflection of the statements can be seen.
