Answer:
b. $38,000 cost basis in XYZ and a $2000 cost basis in PDQ
Explanation:
The aggregate cost basis does not change in a spin-off. The original cost basis in XYZ stock is $40,000. After the spin off, the customer gets 100 shares of PDQ, with a $20 per share value = $2,000. This is the PDQ cost basis, and it comes out of the XYZ cost basis.
$40,000 XYZ cost basis - $2,000 PDQ cost basis = $38,000 adjusted XYZ cost basis.
Answer: D. The government can use a tax to increase the marginal private cost of producing dry cleaning to equal the marginal social cost.
Explanation:
The Marginal Private Cost(MPC) is the cost that a company incurs per producing an additional good while Marginal Social Cost(MSC) is the cost incurred by the society (third parties) due to an additional good being produced. This includes marginal private costs as well.
The government should tax firms in such a way that they will see that MPC equal their MSC because this would ensure that they feel the full weight of the effects that their production is placing on the society. This will encourage them to produce at an efficient level that would reduce costs as much as possible especially MSCs.
Answer:
D
Explanation:
Price discrimination is when the same product is sold at different prices to customers in different markets
<u><em>Types of Price Discrimination</em></u>
1. first degree price discrimination : here sellers charge each consumer at their willingness to pay in order to eliminate consumer surplus.
2. second degree price discrimination : here firms offer different prices depending on the quantity purchased. e.g. giving discounts for bulk purchases.
3, third degree price discrimination : firms charge different prices to different groups of customers. e.g. having a certain price for senior citizens, students
<u><em>Requirements to practice successful price discrimination</em></u>
- The firm must have market power. If the firm does not have market power and attempts to price discriminate they would lose customers
- The firm must have different elasticities of demand for their product in different markets
- The firm must be able to segment the market for their products
Answer:
A: $1,475,000
Explanation:
The computation of the overhead applied is shown below:
But before that first determine the predetermined overhead rate which is
= Estimated annual overhead cost ÷ Estimated machine hours
= $1,500,000 ÷ 300,000
= $5
Now the applied overhead is
= Predetermined overhead rate × Actual machine hours
= $5 × 295,000
= $1,475,000
Answer:
I used an excel spreadsheet to calculate each unit's ending inventory price:
Product 1 = $7,20
Product 2 = $10,20
Product 3 = $11,75
Product 4 = $5,25
Product 5 = $5,60