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Andrej [43]
3 years ago
14

Income Statement, Direct and Indirect Cost Concepts, Service Company

Business
1 answer:
Fofino [41]3 years ago
8 0

Answer:

Send It Packing

1. The cost of materials used for packaging and mailing services during May is $11,550.

2. The prime cost for May is $51,170 (direct materials and labor and direct overhead)

3. The conversion cost for May is $43,700 (labor and overhead)

4. The total cost of services for May is $55,250

5. Income Statement for the month of May

Service Revenues                       $102,100

Cost of services:

Cost of materials used $11,550

Cost direct labor used  25,570

Overhead incurred         18,130  $55,250

Gross profit                                 $46,850

Franchise fee            $5,105

Advertising expense  2,750

Administrative costs  3,650       $11,505

Net income                                $35,345

6. The overhead incurred has $14,050 direct and $4,080 indirect costs.  The direct cost was paid to the courier companies for delivery services.  The indirect costs were incurred for rent, utilities, and insurance.

Explanation:

a) Data and Calculations:

Beginning inventory of materials = $1,050

Purchases of materials =               $11,450

Materials available for use =        $12,500

Ending inventory of materials =       $950

Cost of materials used =              $11,550

Cost direct labor used =               25,570

Overhead incurred =                      18,130

Franchise fee (5% of $102,100)      5,105

Advertising expense =                   2,750

Administrative costs                      3,650

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3 years ago
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sineoko [7]
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A perfectly competitive market is in long run equilibrium. At present there are 100 identical firms each producing​ 5,000 units
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Explanation:

I have attached a graph to explain.

Originally the Perfectly Competitive Market is in a long run Equilibrium.

This means that at 5000 units the $20 selling price was as a result of Marginal Revenue being equal to Marginal Cost.

Now a sudden change in Demand has taken the price up which then forces the Marginal Revenue Curve upwards.

This will culminate with the Marginal Revenue Curve now intersecting the Marginal Cost curve at a higher point being point F so that profit can be maximised.

This higher level will thus lead to a higher output than 5000 units at point Q as the firm will increase output.

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7 0
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