COMMUNIST
Under the Communist System the number of choices in the market is directly related to government involvement in markets.
Communist system is a market system wherein all market decisions are made by the government.
Answer:
Incremental cost= $61,875
Explanation:
Giving the following information:
Gelb Company currently manufactures 49,500 units per year of a key component for its manufacturing process. Variable costs are $5.15 per unit, fixed costs related to making this component are $75,000 per year, and allocated fixed costs are $70,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.90 per unit
We need to determine whether it is more convenient to produce the component or outsource it. We will only consider the relevant costs, therefore the fixed costs will not be taken into account.
Make in house:
Cost= 49,500*5.15= $254,925
Buy:
Cost= 49,500*3.90= $193,050
Incremental cost= 254,925 - 193,050= $61,875
Answer:
Present value of investment X = $41,225.37
Present value of investment Y = $37,233.50
Explanation:
The present value of the cash flows can be found by discounting the cash flows at the discount rate.
This can be found using a financial calculator
Cash flow each year from year 1 to 9 for investment X = $5,800
Discount rate = 5%
Present value = $41,225.37
Cash flow each year from year one to year 5 for investment Y = $8,600
Discount rate = 5%
Present value = $37,233.50
I hope my answer helps you