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Vlad [161]
3 years ago
6

Indicate how each of the following would shift the (1) marginal-cost curve, (2) average-variable-cost curve, (3) average-fixed-c

ost curve, and (4) average-total-cost curve of a manufacturing firm. In each case specify the direction of the shift.
Required:
a. A reduction in business property taxes.
b. An increase in the nominal wages of production workers.
c. A decrease in the price of electricity.
d. An increase in insurance rates on plant and equipment.
e. An increase in transportation costs.
Business
1 answer:
DerKrebs [107]3 years ago
6 0

Answer:

a. A reduction in business property taxes.  Fixed cost.

Marginal cost curve = No change

Average variable cost curve = No change

Average-fixed-cost curve = Shift down

Average-total-cost curve = Shift down

b. An increase in the nominal wages of production workers is a  Variable cost.

Marginal cost curve = Shift up

Average variable cost curve = Shift up

Average-fixed-cost curve = No change

Average-total-cost curve = Shift up

c. A decrease in the price of electricity (Variable cost)

Marginal cost curve = Shift down

Average variable cost curve = Shift down

Average-fixed-cost curve = No change

Average-total-cost curve = Shift down

d. An increase in insurance rates on plant and equipment.  (Fixed cost)

Marginal cost curve = No change

Average variable cost curve = No change

Average-fixed-cost curve = Shift up

Average-total-cost curve = Shift up

e. An increase in transportation costs. (Variable cost)

Marginal cost curve = Shift up

Average variable cost curve = Shift up

Average-fixed-cost curve = No change

Average-total-cost curve = Shift up

Explanation:

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Neuman Corporation Convertible Bonds The following data apply to Neuman Corporation's convertible bonds: Maturity: 10 Stock pric
Natalija [7]

Answer:

A. The bond’s conversion ratio is 28.57

B. The bond’s conversion value is $857.14

C. The bond’s straight debt value is $798.70

D. The minimum price at which Neuman’s bonds should sell is $857.14

Explanation:

A. In order to calculate the bond’s conversion ratio we would have to calculate the following formula:

bond’s conversion ratio=par value/conversion price

According to the given data:

par value=$1,000

Conversion price=$35

Therefore, bond’s conversion ratio=$1,000/$35

bond’s conversion ratio=28.57

B. To calculate the bond’s conversion value we would have to make the following calculation:

bond’s conversion value=bond’s conversion ratio*Stock price

bond’s conversion value=28.57*$30.00

bond’s conversion value=$857.14

C. To calculate the bond’s straight debt value we would have to calculate the following formula:

bond’s straight debt value=PV(0.08,10,50,1,000)

bond’s straight debt value=$798.70

D. The minimum price at which Neuman’s bonds should sell is $857.14

7 0
2 years ago
White Tiger Electronics produces CD players using an automated assembly line process. The standard cost of CD players is ​$148 p
Stolb23 [73]

Answer:

A) a 23.5% decrease in materials

B) a 64% decrease in labor costs

C) a 29.1% decrease in overhead

Explanation:

White Tiger's multifactor productivity = $300 / $148 = 2.027

if we want to increase the multifactor productivity by 12%, it will = 2.27

since we will not change the sales price, we must determine the new total cost:

$300 / cost = 2.27

cost = $300 / 2.27 = $132.16 ≈ $132, which represents a $16 decrease

A) materials ⇒ $16/$68 = 23.5%

B) labor costs ⇒ $16/$25 = 64%

C) overhead ⇒ $16/$55 = 29.1%

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3 years ago
Depreciation Methods Vorst Corporation's schedule of depreciable assets at December 31, 2016, was as follows: Asset Cost Accumul
lions [1.4K]

Answer:

c. $14,400

Explanation:

Double declining depreciation method can be described as an accelerated depreciation technique which charges depreciation expense faster than the straight-line depreciation method, because double declining method obtains its depreciation rate by multiplying the rate of straight-line depreciation method by 2.

From the Vorst Corporation's schedule of appreciable assets at December 31, 2016, the following data are obtained for Asset A:

Cost = $100,000

Accumulated Depreciation = $64,000

Acquisition Date = 2015

Residual value = $20,000

Estimated useful life = 5 years

Therefore, we have:

Straight line method depreciation rate = 1 / Estimated useful life = 0.20, or 20%

Double declining depreciation rate = Straight line method depreciation rate * 2 = 40%

Beginning book value in 2017 = Cost - Accumulated Depreciation = $100,000 - $64,000 = $36,000

Depreciation expense for 2017 = Beginning book value in 2017 * Double declining depreciation rate = $36,000 * 40% = $14,400.

Therefore, Vorst should record $14,400 as depreciation expenses in 2017 for Asset A.

Important End Note:

Under the double declining depreciation method, residual is adjusted for in the last year of the estimated useful life of the asset.

Based on the information for Asset A, its last useful year is 2019 and that is why the residual value is not adjusted for in 2017 above.

6 0
3 years ago
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