Norwall Company’s budgeted variable manufacturing overhead cost is $3.00 per machine-hour and its budgeted fixed manufacturing o
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Answer:
Increase quantity to where AC = MC = D=AR=MR
Explanation:
A perfectly competitive market is where there are many firms in the industry producing homogeneous products. There is ease of entry and exit into and out of the market. They are price takers and earn normal profits in the long-run. In order to maximize profits, a firm in a perfectly competitive industry should produce an the quantity where its average cost is equal to marginal cost when AR = MR = D. In other words, when the AC and MC curves intersect with AR = MR = D curve.
<em><u>Please refer diagram</u></em>
The firm is currently producing at a point where AC > MC at quantity 1000. In order to reach AC = MC, the firm has to increase its quantity to Qe. As it increases quantity, although marginal cost increases, average cost falls because now fixed costs are spread over a larger quantity of output.
At Qe, the three curves intersect and is the point where this firm can maximize its revenue (Price = Pe). At a price higher than this, it would lose customers since there are many others producing the same product and customers can easily shift to another.
Answer:
$9,400
Explanation:
We know,
predetermined overhead rate for machine hour =
Given,
Total overhead cost = $690,900
Total machine hours = 1,470
Putting the values into the formula, we can get
predetermined overhead rate for machine hour =
predetermined overhead rate for machine hour = $470
When we use a separate job, the overhead cost will be = predetermined overhead rate × total hours used by the job.
The amount of overhead should be applied to Job 65A if that job uses 20 machine hours during January = 20 hours × $470 = $9,400