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emmasim [6.3K]
3 years ago
7

5. A firm currently produces its desired level of output. Its marginal product of labor is 400, its marginal product of capital

is 1,000, the wage rate is $20 and the rental rate of capital is $100. In this case, the firm should: a. employ more capital and more labor. b. employ less labor and less capital. c. employ less labor and more capital. d. employ less capital and more labor. e. not change its allocation of capital and labor
Business
1 answer:
gizmo_the_mogwai [7]3 years ago
7 0

Answer:

D.

Explanation:

Firms will hire more labor when the marginal revenue product of labor is greater than the wage rate, and stop hiring as soon as the two values are equal.

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The term externalities refers to Select one: a. regulations imposed on a firm by government. b. a nation that is a trading partn
pogonyaev

Answer:

Option (c) is correct.

Explanation:

During an economic activity between the two parties, if the third party is affected (Positively or negatively) by this economic transaction then this is known as externality.

There are two types of externalities:

(i) Positive externality: When the third party is positively affected by an economic transaction between the two parties.

(ii) Negative externality: When the third party is negatively affected by an economic transaction between the two parties.

Now, suppose there is a steel manufacturing company for the consumers. But the people who lives near this company have to bear the cost of the pollution created by the company. This is a negative externality.

5 0
3 years ago
Select all that apply GAAP and IFRS rules ______. require that the same method be used for both internal and external segment re
Alexxandr [17]

Answer:

The correct options are "A, C, and D".

Explanation:

  • GAAP becomes regarded as a relatively 'rules-based' management framework, seems to be the accounting technique used throughout the United States
  • IFRS becomes quite 'principles-based', although this would be the accounting framework used in more than 110 countries throughout the globe.
  • These allow the same approach being used for international and domestic section reporting, which generate reconciliation issues.

4 0
3 years ago
Premium Watches, Inc. produces and sells children’s smart watches. The company started the year 2019 with 1,500 watches and prod
borishaifa [10]

Answer:

(1)Cost of Good Manufactured $191,830(2)) Net income $21,547.25 (3) cost of producing one watch $2.45

Explanation:

The question is not complete, here is the missing part of the question

Premium watches inc

Income statements As at December 31st, 2018

Sales revenue (67,500 watches) 269,500

Unearned rent revenue. 4,000

Gain on sale of investment. 1,200

Royalty revenue. 500

Interest payable. 1,500

-----------

Total Revenue. 276,700

Less operating expenses

Indirect manufacturing labour cost 7,200

Utilities 9,200

Direct manufacturing labour cost 47,000

Factory equipment 50,000

Direct materials purchased 95,000

Insurance expense 2,500

Rent Expense 27,000

Interest expense 300

Selling expense 34,700

Administrative expense 30,900

Research & development expense 4,000

Short term investment 8,000

Dividend paid 500

Restructuring cost 6,000

Total operating expenses. 327,300

------------

Net operating loss. ($50,600)

(a) 65% of utilities & 70% of insurance expense related to factory operations. Apply the remaining amount equally to selling expense & Administrative expense

(b) 90% of the rent expense is associated with factory operations. Allocate the remaining 10% equally to selling expense and Administrative expense

(c) Factory equipment is estimated to have a useful life of 5 years with a $5,000 salvage value remaining at the end of its useful life. The company uses the straight line method of depreciation.

(d) inventory balances at the beginning and ending of the period were

January 2018. Dec 31,2018

Direct materials. 4,600. 7,000

Work in process. 9,000. 12,000

Finished goods. 3,750. ?

These amount were not taken into account when the statement were prepared

(e) The company tax rate is 21%

The president is dissapointed with the result of operations and has asked you to review the income statement and make a recommendation as to whether the company should look for a buyer for its assets Required

(1) prepare a schedule cost of good manufactured for the year ended December 31, 2018

(2) prepare a corrected multiple -step income statement for the year ended 31st December, 2018

(3) Calculate the cost of producing one watch if the company produced 110,000 watches in 2018 (round your answer to 2 decimal places )

Here is the solution

Schedule cost of Goods Manufactured for the year ended December 31st, 2018

Beginning work in process inventory

Direct materials used

Add: Beginning Direct materials 4,600

Add: purchases of Direct materials 95,000

Add: Direct Labour. 47,000

------------

Prime Cost. 146,600

Add: Manufacturing overhead

Indirect material labour cost 7,200

Utilities. 5,980

Insurance. 1,750

Rent Expense. 24,300

Depreciation of factory equipment 9,000

Add: Beginning work in process 9,000

Less: Ending work in process. 12,000

-----------

45,230

------------

Cost of Good Manufactured. 191,830

---------------

(2) corrected Multiple - step income statement for the year ended December 31st, 2018

Sales. 269,500

Less: Cost of good sold 195,580

----------

Gross Margin. 73,920

Operating Expenses

Utilities 3,220

Insurance 750

Selling Expense 12,145

Administrative expense 9,270

Rent allocated to selling expense 3,470

Rent allocated to Administrative expense 3,090

Research &Development expense 5,000

Prepaid insurance expense 4,000

Restructuring cost 6,000

-----------------

46,945

------------

Operating income. 26975

Interest expense. 300

------------

Income before taxes. 27,275

Income taxes. 5,727.75

--------------

Net income. 21,547.25

------------------

(3) To calculate the cost of producing one watch if the company produced 110,000 watches in 2018

Sales / Numbers of watches produced

= 269,500 / 110,000

= $2,45

Workings of schedule of cost of Goods Manufactured

Utilities =0.65 × 9,200 = 5,980

Insurance = 0.7 × 2,500 = 1,750

Rent Expense = 0.9 × 27,000 = 24,300

Factory equipment depreciation = Cost - Salvage value / Number of years

= 50,000 - 5,000 / 5

= 45,000 /5

= 9,000

Workings of cost of Goods sold

Cost of good sold = Beginning finished good inventory + Cost of Good Manufactured - Ending finished good inventory

= 3,750 + 191,830

= 195,580

Workings of income statement

Utilities = 0.35 × 9,200 = 3,220

Insurance= 0.3 × 2,500 = 750

Selling Expense = 0.35 × 34,700 = 12,145

Administrative expense = 0.3 × 30,900 = 9,270

10% of rent expense allocated to selling & Administrative

Selling = 0.1 × 34,700 = 3,470

Administrative = 0.1 × 30,900 = 3,090

Income taxes = 0.21 × 27,275 = 5,727.75

4 0
3 years ago
A _____ occurs when a company's management decides to add products to an existing product line in order to compete more broadly
Harman [31]

C. Product line extension.

7 0
3 years ago
Decision Point: Your Final Meeting: RC Helicopter Piloting Radio controlled helicopter Your next client is Alan, who runs a high
hoa [83]

Answer:

Leave the price alone. Although it may lack some of the features that competitors’ models have, the Boss brand is well-recognized and well-respected in the market

Explanation:

You chose to lower the price to $359.That was the best choice.During the maturity stage of the product life cycle, increased competition eventually forces price cutting, and market share leadership may outweigh profit as a pricing objective, so this is a good option. However, it would take some research to determine whether the company can still make a profit at this price.

8 0
3 years ago
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