Using these data from the comparative balance sheet of Rollaird Company, perform horizontal analysis.
1 answer:
You might be interested in
Answer:
a. marginal revenue is equal to marginal cost.
Explanation:
Monopolistic competition can be defined as an imperfect competition where many producers or organizations sell differentiated products that are not perfect substitutes. Examples of firms or organizations engaging in a monopolistic competition are restaurants, shoes, clothing lines etc.
Generally, a monopolistic competitive market is characterized by the presence of large numbers of firm (producers) and a very low entry barrier.
Hence, in a monopolistic competition, firms have a degree of control over price, make independent decisions and can freely enter or exit the market in the long-run. Therefore, these firms combine elements of both monopoly and competition.
When a monopolistically competitive firm is in long-run equilibrium marginal revenue is equal to marginal cost . This ultimately implies that in the long-run, firms engaging in monopolistic competitive market are often going to manufacture the quantity of goods where the marginal cost (MC) curve intersect with the marginal revenue (MR). Also, the price set would be greater than the minimum average total cost (ATC).
<em>Thus, a monopolistic competitive producer has a highly elastic demand curve and firms would eventually break even in the long-run. </em>
Answer:
EOQ 400 units
inventory cost $1,200
holding $600
ordering $600
reorder point 369.9 pounds
Explanation:
EOQ
<u>Where:</u>
D = annual demand = 200 days x 75 pound per day = 15,000
S= setup cost = ordering cost = $ 16
H= Holding Cost = $ 3
EOQ 400
Inventory cost:
average inventory x holding cost
400/2 x $3 = $600 holding cost
order per year x order cost
15,000/400 x $16 = $600 order cost
<u>reorder point: demand x lead time + safety stock</u>
to get a confidence of 99% we need to look at the table for a Z value which is above 99% of the cases and then, move it to our ditribution.
In the talbe we got at a Z of 2.33 has a score of 0.99 which is the probability we want.
Now we calculate the safety stock
safety stock: 69.9
This is the safety stock
Now the company will reorder at:
daily use x lead time + safety stock:
75 x 4 + 69.9 =
300 + 69.9 = 369.9