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pogonyaev
3 years ago
9

A firm producing good Y recently increased monthly production from​ 1,500 units to​ 2,000 units. This had no impact on the marke

t price of good Y. At the new production level of​ 2,000 units, the​firm's average cost is​ $3.5 while its marginal cost of production is​ $4. The marginal revenue however is fixed at​ $5 for all levels of output. Jake Williamson is the operations head of the firm. Jake feels​ that, since the firm has the​ capacity, it should have increased production further to​ 2,500 units which would have maximized profits. On the other​ hand, Mathew Hayden of the market research team anticipates an increase in price to​ $5.5 in the near future. He therefore claims that the firm may not be maximizing economic profit in the short run even at​ 2,500 units.
Which of the following is most strongly implied by this​information?
A. At the current level of​ production, the firm is making a profit of​ $3,000.
B. The current price of good Y is equal to​ $4.
C. Mathew feels that the demand curve faced by the firm will shift downward.
D. Jake thinks that at the production level of​ 2,500 units, the average cost of producing Y will be equal to the market price.
E. The demand curve currently faced by the firm is horizontal at​$4.
Business
1 answer:
MAVERICK [17]3 years ago
7 0

Answer:

A. At the current level of​ production, the firm is making a profit of​ $3,000.

Explanation:

Units produced at first scenario 1500

Units produced at second scenario 2000

$3.5 average cost

$4 marginal cost

$5 marginal revenue x 2000 units=$10.000

(-) $3.5 x 2000 units                        =$7.000

_____________________________________

Profit                                                  =$3000

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Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo.
motikmotik

Answer:

a.                         Joplin Industries Inc.

             Absorption Costing Income Statement

                  For the Month Ended June 30

Sales                                                                        $81,000,000

Less: Beginning inventory           $4,387,200          

Cost of goods manufactured       <u>$45,756,000</u>

Cost of goods sold                                                 <u>$50,143,200</u>

Gross Profit                                                              $30,856,800

Selling and Administrative Expenses                    <u>$13,122,000</u>

Operating Income                                                  <u>$17,734,800</u>

b.                           Joplin Industries Inc.

                 Variable Costing Income Statement

                      For the Month Ended June 30

Sales                                                                        $81,000,000

Variable cost of goods sold                                   <u>$40,500,000</u>

Manufacturing Margin                                            $40,500,000

Selling and Administrative Expenses                    <u>$12,150,000</u>

Contribution Margin                                                $28,350,000

<u>Fixed cost</u>

Manufacturing cost                   $8,856,000

Selling and Admin Expenses   <u>$972,000</u>

Total Fixed cost                                                         <u>$9,828,000</u>

Operating Income                                                     <u>$18,522,000</u>

4 0
3 years ago
On July 1, 20X1, James and Short formed a partnership. James contributed cash. Short, previously a sole proprietor, contributed
Brrunno [24]

Answer:

James and Short LLC

Short's capital account on July 1, 20X1 should be recorded at the fair value of contributed property minus the mortgage liability, which the partnership assumed.

Explanation:

The fair value of contributed property is the current market value of the contributed property by Short.  It is the market value that will determine how the contributed property can be valued.  The market value assumes that the contributed property is being sold in pieces and not as a whole.  This is why the value is considered a fair basis for recognizing the capital contribution of Short into the partnership.

3 0
3 years ago
In March 2018, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF p
kiruha [24]

Answer:

The rate of return is 7.20%

Explanation:

a)  Assuming you purchased the bond for $880, in order to calculate the rate of return you earn if you held the bond for 25 years until it matured with a value $5,000 we would have to calculate the following formula:

Rate of Return = [FV/PV]1/n - 1

Rate of Return= [$5,000 / $880]1/25 - 1 = [5.6818]0.04 - 1 = 1.0720 - 1 = 0.0720, or 7.20%

Rate of Return= [5.6818]0.04 - 1

Rate of Return= 1.0720 - 1

Rate of Return=0.0720, or 7.20%

The rate of return is 7.20%

5 0
2 years ago
Consider the following financial statement information for the Hop Corporation:
EastWind [94]

Answer: Operating cycle = 84.70 days

Cash cycle = 41 days

Explanation:

Beginning inventory = $11,100

Ending Inventory = $12,100

Average inventory = ($11100 + $12100)/2 = 11600

Average Accounts receivable = (6,100 + 6,400)/2 = 6250

Average Accounts payable = (8,300 + 8,700)/2 = 8500

Day sales in inventory = Average inventory × 365 / Cost of goods sold

= 11600 × 365 / 71000 = 59.63 days

Average collection period = Average receivable × 365 / Credit sales

= 6250 × 365 /91000 = 25.07 days

Average payment period = 43.70 days

Therefore, operating cycle will be:

= Day sales in inventory + Average collection period

= 59.63 days + 25.07 days

= 84.70 days

Cash cycle = Operating cycle - Average payment period

= 84.70 - 43.70

= 41 days

7 0
3 years ago
Grassley Corporation allocates administrative costs on the basis of staff hours. Short-run monthly usage and anticipated long-ru
vodka [1.7K]

Answer:

$80,000

Explanation:

Calculation to determine what the amount of variable administrative cost to allocate to Department 1 would be

Variable administrative cost to allocate to Department 1=(40,000 ÷100,000) x $200,000

Variable administrative cost to allocate to Department 1=0.4×$200,000

Variable administrative cost to allocate to Department 1= $80,000

Therefore The Variable administrative cost to allocate to Department 1 would be $80,000

4 0
2 years ago
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