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Drupady [299]
3 years ago
8

A company produces​ 1,000 packages of cat food per month. The sales price is​ $4.00 per pack. Variable cost is​ $1.60 per​ unit,

and fixed costs are​ $1,800 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will increase from​ $1.60 to​ $1.80 per​ unit, and fixed costs will increase by​ 10%. The company will price the new product at​ $8 per pack. How will this affect operating​income?
A.

Operating income will remain unchanged.

B.

Operating income will increase by​ $3,620 per month.

C.

Operating income will decrease by​ $2,020 per month.

D.

Operating income will decrease by​ $3,620 per month.
Business
1 answer:
spin [16.1K]3 years ago
4 0

Answer:

B.  Operating income will increase by​ $3,620 per month.

Explanation:

In this question, we have to compare the operating income between current and expected proposal which is shown below:

We know that,

Operating income = Sales - variable cost - fixed cost

where,

Sales = Selling price per unit × Number of units produced per month

         = $4 × 1,000

         = $4,000

Variable cost = Variable cost per unit  × Number of units produced per month

                      = $1.60 × 1,000

                      = $1,600

And, the fixed cost is $1,800

Now put these values to the above formula

So, the value would be equal to

= $4,000 - $1,600 - $1,800

= $600

Now for expected proposal

Operating income = Sales - variable cost - fixed cost

where,

Sales = Selling price per unit × Number of units produced per month

         = $8 × 1,000

         = $8,000

Variable cost = Variable cost per unit  × Number of units produced per month

                      = $1.80 × 1,000

                      = $1,800

And, the fixed cost is $1,800 + $180 = $1,980

Now put these values to the above formula

So, the value would be equal to

= $8,000 - $1,800 - $1,980

= $4,220

The difference would be

= $4,220 - $600

= $3,620

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Answer:

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Explanation:

A market economic system is one in which laws of demand and supply determine the production of goods and services. Agriculture in market economic systems is not being replaced by subsistence farming because subsistence farming is low scale farming that meets the needs of a family and as such is not affected by any laws of demand and supply as in commercial farming.

Cheers.

3 0
3 years ago
Which economic system leaves production decisions completely up to the producers? 1. mixed economy 2. command economy 3. planned
ozzi

Answer:

4. free-market economy

Explanation:

Free-market economy -

A free market refers to the economic system which depends on the demand and supply , where the control of government is nil , is referred to as free - market economy.

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Hence, from the given statement of the question,

The correct term is free - market economy.  

7 0
3 years ago
Delores Bierlein paid a $200 deposit toward the rental of the Silver Room at Alex's Continental Inn for her wedding reception. L
sweet-ann [11.9K]

Answer:

It does not

Explanation:

In this question, we are asked to evaluate if a particular transaction carried out between a customer and an inn falls within the dictates of the local consumer protection law in the state.

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3 0
2 years ago
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Answer:

The second statement is true.

Explanation:

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7 0
3 years ago
asmine Smith owns a condo worth $250,000, a car valued at $15,000, and miscellaneous assets worth $7,500. She owes $190,000 on t
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Answer:

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Putting the values above:

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