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Alex777 [14]
3 years ago
9

Chiquita produces bananas for an average explicit cost of $0.25 per banana and sells 1 million bananas per week for a price of $

0.50 per banana. The implicit costs per week are $200,000. Which of the following statements is true?a. Chiquita makes an accounting profit of $250,000 b. Chiquita makes an accounting profit of $50,000. c. Chiquita makes an economic profit of $250,000. d. Chiquita makes an economic profit of $450,000. e. More than one answer is correct
Business
1 answer:
Sergio039 [100]3 years ago
5 0

Answer:

Option (A) is correct.

Explanation:

Given that,

Implicit costs per week = $200,000

Average explicit cost per banana = $0.25 per banana

Per week bananas sold = 1 million

Explicit cost = Average explicit cost per banana × No. of banana sold

                    = $0.25 × 1,000,000

                    = $250,000

Total revenue = No. of banana sold × Selling price of each banana

                        = 1,000,000 × $0.50

                        = $500,000

Accounting profit = Total revenue - Explicit cost

                             = $500,000 - $250,000

                             = $250,000

Economic profit:

= Total revenue - Explicit cost - Implicit costs

= $500,000 - $250,000 - $200,000

= $50,000

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Answer:

One of the great dangers in allocating common fixed corporate costs is that such allocations can make a product line look less profitable than it really is.

Explanation:

Therefore, care must be exercised so that a product line is not eliminated because the common fixed costs have been allocated to it such that it becomes unprofitable.  This is why it is necessary to identify activity cost pools into which such fixed costs can be accumulated and from which they can be allocated to product lines.  Using ABC costing approach, for instance, offers a means of escape because the system tries to allocate costs based on the level of usage or consumption of such common costs by each product line instead of using arbitrary allocation formulas.

4 0
2 years ago
In an economy (or an organization, or a household) in which resources are allocated reasonably efficiently, it is ____ possible
lukranit [14]

Answer: Rarely if ever

Explanation:

In an economy resources are limited while human wants are unlimited. So resources must be used in a way that maximum consumer wants can be met efficiently. In an economy when resources are allocated efficiently it is rarely possible to make some else better off without making someone else worse off. That is it is rarely possible to increase performance of some without sacrificing on some other dimension.

3 0
3 years ago
The period before a trial takes place is called the
nadezda [96]

Answer:

The answer would be A.

Explanation:

Discovery process, finding the facts.

4 0
2 years ago
Gammy Corporation provides services with a normal price of $800,000 and a trade discount of $100,000. Terms are 2/10, n/30 and t
oee [108]

Answer:

$686,000

Explanation:

net service revenue = gross revenue - discount for early payment

gross revenue = total sales price - trade discount

gross revenue = $800,000 - $100,000 = $700,000

net service revenue = $700,000 - 2%($700,000) = $700,000 - $14,000 = $686,000

4 0
3 years ago
The following data is from the Ace Guitar Company for the A and B regions.
Marina CMI [18]

Answer:

Ace Guitar Company

The service departments' expenses proportional to the sales of each region are as follows:

A Region = $216,580

B Region = $116,620

Explanation:

a) Data and Calculations:

                                A Region      B Region    Total

Sales                       $773,500     $416,500  $1,190,000

Cost of goods sold  293,900       158,300      452,200

Selling expenses      185,600       100,000     285,600

Service department expenses

Purchasing              $199,900

Payroll accounting     133,300

Total                        $333,200

A Region = $216,580 ($773,500 / $1,190,000 * $333,200)

B Region = $116,620 ($416,500 / $1,190,000 * $333,200)

8 0
3 years ago
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