The <u>law of increasing relative cost </u>states that the opportunity cost of producing a good always rises as one produces more of it.
According to the law of increasing costs, production eventually loses efficiency as it grows. The labor expenses for each additional item will increase, for instance, if increased production requires overtime work from your workforce.
Opportunity cost is the value of other commodities or services you must forgo in order to get your desired item. The term "cost" as used by economists often refers to opportunity cost. Cost is frequently mentioned in conversations or on the news.
According to the law of increasing opportunity cost, the cost of manufacturing the next unit rises as you keep up with the production of a given good.
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Answer:
The conversion cost per equivalent unit is $3.31
Explanation:
The computation of the conversion cost per equivalent unit is shown below:
= Total conversion costs ÷ Total equivalent units
where,
Total conversion cost = completed units + Conversion costs during April
= $6,000 + $35,000
= $41,000
And, the total equivalents units equal to
= Finished good units × percentage of completion + ending work in process units × percentage of completion
= 11,500 units × 100% + 1,500 units × 60%
= 11,500 units + 900 units
= 12,400 units
Now put these values to the above formula
So, the per unit would equal to
= $41,000 ÷ 12,400 units
= $3.31 per unit
Answer:
There are some other ways to act scenario analysis. The standard method is to decide the standard deviation of regular or monthly safety returns and so calculate what amount is required for this portfolio if each security yields returns that exist two or three standard deviations above and below the average performance. This means the analyst may get a fair amount of certainty considering the difference in the value of the portfolio within a given period, by simulating these extremes. Scenarios being thought may refer to one single variable, e.g., the relative success or failure of the current product launching, or the combination of elements, e.g., those results of the product launch combined with possible changes in the activities of competitor businesses. The purpose is to examine the effects of the more extreme results to define an investment strategy.
Answer:
(1) $2,720
(2) $2,220
Explanation:
Given the following sequence:
300 units at $6, 400 units at $7 and 200 units at $8
(1) FIFO method
Ending inventory = 360 units
Cost of ending Inventory:
= 200 units at $8 + 160 units at $7
= 200 × $8 + 160 × $7
= 1,600 + 1,120
= $2,720
(2) LIFO method
Cost of ending Inventory:
= 300 units at $6 + 60 units at $7
= 300 × $6 + 60 × $7
= 1,800 + 420
= $2,220
Answer:
$48,200
Explanation:
The computation of the direct material cost for the month of May is shown below:
Direct materials cost = Beginning raw materials inventory + purchases made - Ending balance of raw materials - Indirect materials
= $24,000 + $71,000 - $44,000 - $2,800
= $48,200
Hence, the direct material cost for the month of May is $48,200
