C.
Allocative efficiency in simple terms basically means there is no wastage, therefore if producers produce at price equals marginal coat, they are producing at the point where consumers are willing to pay that final price. Refer to the poorly drawn diagram for reference.
I believe this needs to come from a non monetary source. Pure competition allows for no price change between firms. So profit maximization needs to come from market share. I believe the answer would have to be in service levels or ease of business improvements. If you are forced to have the same price levels the levers to pull are few but the exist only customer service, ease of transacting, other value add initiatives. Just my thoughts
An waste of money you can get better stuff
Answer:
Which of the following are advantages of using the plantwide overhead rate method? Option B is the most suitable answer - The necessary information is readily available. It is more accurate than traditional overhead allocations.
Explanation:
Majorly, the advantage of applying the plantwide overhead rate method is that the necessary information is readily available.
Therefore, option B is the most suitable answer.
Answer:
Net annual average profit
= Net cashflow - Depreciation
= $6,000 - $4,200
= $1,800 per annum
Depreciation
= <u>Cost - Residual value</u>
Estimated useful life
= $<u>25,200 - 0</u>
6 years
= $4,200 per annum
Accounting rate of return
= <u>Average profit</u> x 100
Initial outlay
= <u>$1,800</u> x 100
$25,200
= 7.14%
Explanation:
Accounting rate of return is the ratio of average profit to initial outlay multiplied by 100. Average profit is calculated as net cashflow minus depreciation. Depreciation is calculated as cost minus residual value divided by estimated useful life of the machine.
Accounting rate of return is average profit divided by initial outlay multiplied by 100.
