What are the remains after the costs of running a business have been paidA. stockB. taxesC. profits

5-7 Short Run versus Long Run A firm sells 1,000 units per week. It charges $70 per unit, the average variable costs are $25, an

irina1246 [14]

a. The firm should carry out the activities.

b.The firm should carry out activities until it is covering the cost.

c. The firm should shut down business activities when the price of the product goes below $25 in short-run.

d. The firm should shut down business activities when the price of the product goes below $65 in long-run.

Further Explanation:

a

Steps taken by the firm in the long run:

The sales price of the product is $70. The total average cost of the product is $65. The firm can cover all its costs (variable and fixed) and generating a profit of $5. So it should continue to carry out its business operations in the short run.

b.

Steps taken by the firm in the long run:

In the long run, all the costs of the firm are variable. In the current case, the fixed cost is around 60% of the total cost. So the firm should attempt to decrease this cost. If the firm can decrease the total cost, it should carry out the business activities. The firm can continue to carry out the operational activities until it is making the profit and covering all the product cost.

c.

The appropriate price for shutting down the business in the short-run:

The firm can shut down the business in the short-run when the price of the product is below $25.

In the short run, the firm can only control the variable cost. The firm can not control the fixed cost of the product. In the given case, the variable cost of the product is $25. Therefore, the firm should shut down the business when the price of the product goes below the variable cost ($25).

d.

The appropriate price for shutting down the business in the long-run:

The firm can shut down the business in the long-run when the price of the product is below $65.

In the long run, the firm can influence all the costs of the business. It can influence the variable cost and the fixed cost of the business. Therefore, it should cover the total cost of the product. Thus, the firm should shut down the business when the price of the product goes below the total cost ($65).

Learn more:

1. Learn more about the variable costing

brainly.com/question/9203162

2. Learn more about the overhead expenses

brainly.com/question/4612804

3. Learn more about the cost of the product

brainly.com/question/1757741

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Answer details:

Grade: Senior School

Subject: Economics

Chapter: Decision making (Short-run & Long-run)

Keywords: Short Run, Long Run, sells, units, week, charges, average variable costs, average costs, long run, Why, price, consider, shutting down the long run.

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3 years ago

Disposable income is the money paid to creditors after paying necessities a. True b. False

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Hope this helps.

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Heidi decided to make extra money by offering to do investments for her friends for a fee. She actually did no investing, but us

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3 years ago

Income statement data: Sales $ 5,000 Cost of goods sold 4,200 Balance sheet data: Inventory $ 550 Accounts receivable 110 Accoun

nydimaria [60]

Answer:

A. Accounts receivable period days = 8.0 days

B. Accounts payable period days = 23.4 days

C. Inventory period days = 48.0 days

D. Cash conversion cycle = 32.6 days

Explanation:

A. We know,

Accounts receivable period days = $\frac{365}{Accounts receivable turnover}$

Accounts receivable turnover = $\frac{Net sales}{Average accounts receivable}$

Given,

Sales = $5,000

Accounts receivable = $110

As, there is no beginning balance of accounts receivable, the normal balance of accounts receivable will be treated as average accounts receivable.

Therefore, Accounts receivable turnover = $\frac{5,000}{110}$

Accounts receivable turnover = 45.5 times

Again, Accounts receivable period days = $\frac{365}{45.5}$

Accounts receivable period days = 8.0 days

B. We know,

Accounts payable period days = $\frac{365}{Accounts payable turnover}$

Again, to determine accounts payable period days, we have to find accounts payable turnover.

Accounts payable turnover = $\frac{Purchases}{Average accounts payable}$

As there is no purchase, cost of goods sold will be used to determine the payable turnover. Moreover, there is no beginning balance of accounts payable, we will use ending accounts payable as average payable.

Given,

Purchase (Cost of goods sold) = $4,200

Accounts payable = $270

Accounts payable turnover = $\frac{4,200}{270}$