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docker41 [41]
3 years ago
6

Ramort Company reports the following cost data for its single product. The company regularly sells 20,000 units of its product a

t a price of $60 per unit. If Ramort doubles its production to 40,000 units while sales remain at the current 20,000-unit level, by how much would the company's contribution margin increase or decrease under variable costing?
Business
1 answer:
netineya [11]3 years ago
7 0

Answer:

It will remain at the same level.

Explanation:

the contribution margin will be the same.

Because under variable cost, we only focus on the variable cost to determinate the unit cost. Which doesn't change at unit level.

contribution margin = sales - variable cost.

<u>If we use absorption cost,</u> the <u>cost would decrease</u>, because the fixed cost are distribute over more units. <u>This will increase the income</u>. However this is not the case.

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A VC investor has invested $5 million in the preferred stock of a venture that is now being acquired for $50 million. The invest
Scorpion4ik [409]

Answer: $12.5 million

Explanation:

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According to the video, an interactive website needs to be able to do what things? Check all that apply. invite people to provid
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Read 2 more answers
g efg manufacturing has a product that sells for $15 per unit, and the marginal cost is $5.00. a. compute the lerner index for e
Hitman42 [59]

Answer:

(a) 0.667 (b) The Lerner index helps in estimating of the market power of a firm. it measures the percentage markup that a firm is able to charge.

The conditions where this market power last in the long-run are; the pricing power, Factor mobility, Barrier to entry or exist.

Explanation:

Solution

Given that:

(A) The Lerner index is computed below:

Lerner index = (P-MC)/P

Thus,

($15-$5.00)/$15

=10/15

= 0.667

(B) The Lerner index assist in measuring of the market power of a firm. it measures the percentage markup that a firm is able to charge.

Index spans from a low value (0) to a higher value of (1)

When a firm has a higher value of index, it is able to charge over it;s marginal cost and thus has a greater monopoly power

Other conditions where market power last in the long run is as follows:

  • The pricing power
  • Factor mobility
  • Barrier to entry or exist
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