Answer:
$2,800
Explanation:
The computation of the increase in consumption is shown below:
= Marginal propensity to consume × rise in income
= 0.70 × $4,000
= $2,800
Hence, the consumption would be increased by $2,800
We simply applied the above formula i.e. marginal propensity to consume is multiplied with the rise in income so that the correct answer could come
Complete Question:
1. Select the correct statement regarding relevant costs and revenues.
A. Sunk costs are not relevant for decision-making purposes.
B. Relevant costs are frequently called unavoidable costs.
C. Direct labor is an example of a unit-level cost.
D. Only variable costs are relevant for decision making.
Answer:
1. A
2. D
3. B
Explanation:
1. The correct statement regarding relevant costs and revenues is that sunk costs are not relevant for decision-making purposes. Sunk costs are the opposite of relevant costs because they can't be changed or recovered, as they've been spent or contracted in the past already. Hence, relevant cost are relevant for decision-making purposes but not sunk costs.
2. Expected future revenues that differ among the alternatives under consideration are often referred to as differential revenues. It is the difference in revenues among two (2) alternatives, which would influence decision making.
3. The benefits sacrificed when one alternative is chosen over another are referred to as opportunity costs. It is also referred to as alternative forgone.
<em>For example, Tony gives up going to see a new movie at the cinema in order to prepare for an examination, so as to get a good grade</em>.
C. Opening a bank.
Because your opening up an bank account, therefore you not using any kind of money, or credit. UNTIL you put something inside the account.
Answer:
$0
Explanation:
Given that,
Total revenues = $4,000,000
Cost of goods sold = $3,500,000
Depreciation expense = $500,000
Interest expense = $120,000
Earnings before interest and taxes (EBIT):
= Total revenues - Cost of goods sold - Depreciation expense
= $4,000,000 - $3,500,000 - $500,000
= $0
Therefore, the EBIT for a firm is $0.
