Answer:
The effect on Morgantown's overall profit is $140,000 decrease in Morgantown's profits
Explanation:
In order to calculate the effect on Morgantown's overall profit we would have to make the following calculations:
Contribution margin per unit for Lock Division = Selling price – Variable costs = $40 - $22 = $18
Contribution lost by lock division if Cabinet division buys from outside = $18 * 10,000 = $180,000
Cost per unit saved by Cabinet division = $40 - $36 = $4
Total cost saved by cabinet division = $4 * 10,000 = $40,000
Net decrease in profit = Contribution lost – Cost saved = $180,000 - $40,000 = $140,000
Therefore, the effect on Morgantown's overall profit is $140,000 decrease in Morgantown's profits.
Answer:
Equivalent units for direct material = 52,700
Explanation:
Given:
Completed units = 50,000
Ending inventory = 3,600 units
Ending work in process inventory = 75% complete as to direct materials
Ending work in process inventory = 25% as to conversion costs
Equivalent units for direct material = ?
Computation of equivalent units for direct material:
Equivalent units for direct material = Completed units + [Ending inventory × 75% complete as to direct material]
Equivalent units for direct material = 50,000 + [3,600 × 75%]
Equivalent units for direct material = 50,000 + [2,700]
Equivalent units for direct material = 52,700
Answer: $61,328.15
Explanation:
The amount paid is per year so this is an annuity. It will begin 11 years from now so one should find the present value in that year:
Present Value of annuity = Annuity * ( 1 - ( 1 + rate) ^ - no. of periods) / rate
= 6,260 * ( 1 - ( 1 + 3%) ⁻¹⁷) / 3%
= $82,419.90
That is the present value if the annuity starts 11 years from now which means that it is the present value 10 years from now (ordinary annuities are paid end of period).
You need to discount to current period:
= 82,419.90 / ( 1 + 3%)¹⁰
= $61,328.15
The factor that determines how long this adjustment process takes is that the long-run aggregate supply curve (ASn), that is vertical at the level of potential GDP, is one that determines the level of real GDP in this economy in the long run.
<h3>What is neoclassical model about?</h3>
When there is increases or decreases in aggregate demand, the neoclassical view holds the notion that how the macroeconomy adjusts is due to the foresight it has that even if wages and prices are termed “sticky”, or slow to change, in the short run, they will be flexible.
In the long-run neoclassical analysis, it is shown that the chain of economic events is ever changing as economic output is said to rise above potential GDP.
Learn more about neoclassical model from
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