Assume Baxter Manufacturing begins January with 11 units of inventory that cost $12 each. During January, the following purchase
1 answer:
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Answer:
Veronica is wrong because if Percy division is close, it's fixed won't be eliminated and as such the cost will be shouldered by the other divisions which will lead to a $9,400 reduction in profit.
Though eliminating Percy division will prevent the loss of $26,200. However with a fixed cost totalling $35600 which will have to be beared by other five divisions, eliminating Percy division won't be a good idea.
Explanation:
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Answer:
If sales fall by 20% AFC raises 38 cents per paper, i.e. a 25% increase in AFC.
Explanation:
To find the average fixed cost (AFC), we have to sum all fixed costs and divide it by the amount of units produced. Fixed costs are those that don't depend on how much is produced, in this case, rental and labor cost don't depend on output, as you can neither move to a cheaper place nor decrease labor obligations even if the factory had no output (newspapers printed).
We can see that as the output reduced, AFC rose 38 cents per paper or a 25% increase in AFC.