When producers intentionally or unintentionally pass some of the costs of production onto the community, the good is over-allocated, causing negative externalities to occur.
<h3>What does negative externality mean?</h3>
Negative externality means that the cost of production is greater than the benefits to third parties not involved in production of the goods or services. Goods that generate negative externality are overproduced. An example of an activity that generates negative externality is pollution.
Activities that generate negative externality can be taxed. This would increase the cost of production and discourage overproduction.
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When they spend more than they are able to pay back! Hope this helped! BRANLIEST plz!
Answer:
The ending inventory value at cost is ($100,000)
Explanation:
To calculate the cost of ending inventory using the retail inventory method, we need to know:
- The cost-to-retail percentage = COGS/ sales during current year = (sales – net markup)/sales = ($2,500,000-$200,000)/$2,500,000 = 92%
- The cost of goods available for sale= Cost of beginning inventory + Cost of purchases = $200,000 + $2,000,000 = $2,200,000
- The cost of sales during the period = Sales × cost-to-retail percentage = $2,500,000 x 92% = $2,300,000
- The ending inventory = Cost of goods available for sale - Cost of sales during the period = $2,200,000 - $2,300,000 = ($100,000)
Answer:
1. <u>Calculation of Inventory Turnover Ratio
</u>
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
When Average inventory= Opening Inventory+ Ending Inventory / 2 = (1,542,553 + $1,735,455)/2 = $1,639,004.
Inventory Turnover ratio = $7,250,000 / $1,639,004
Inventory Turnover ratio = 4.42 times
2 If the price of wire is increasing, its good opportunity for the company to take advantage with proper planning. The company has to increase the purchase of the stock to take this advantage however it should also be noted about the opportunity cost as more money now will be invested in the stock. If the increase in Price is minimal then there is no need to increase the purchase of the stock
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