Complete Question:
1. Select the correct statement regarding relevant costs and revenues.
A. Sunk costs are not relevant for decision-making purposes.
B. Relevant costs are frequently called unavoidable costs.
C. Direct labor is an example of a unit-level cost.
D. Only variable costs are relevant for decision making.
Answer:
1. A
2. D
3. B
Explanation:
1. The correct statement regarding relevant costs and revenues is that sunk costs are not relevant for decision-making purposes. Sunk costs are the opposite of relevant costs because they can't be changed or recovered, as they've been spent or contracted in the past already. Hence, relevant cost are relevant for decision-making purposes but not sunk costs.
2. Expected future revenues that differ among the alternatives under consideration are often referred to as differential revenues. It is the difference in revenues among two (2) alternatives, which would influence decision making.
3. The benefits sacrificed when one alternative is chosen over another are referred to as opportunity costs. It is also referred to as alternative forgone.
<em>For example, Tony gives up going to see a new movie at the cinema in order to prepare for an examination, so as to get a good grade</em>.
Answer:
Gap between the supply curve and the market price.
Explanation:
Producers surplus refers to the surplus that a producer of a commodity can obtain. The producers surplus is the difference between the producer's willingness to accept the price and the actual price they have received.
Producers surplus = Actual market price - Willingness to accept the price
Graphically, it is the area between the upper portion of supply curve and the market price.
Answer:
30%
Explanation:
The computation is shown below:
Here we considered a long term bond that time period should be 15 years or more
Now as we know that
Current yield is
= Current payment ÷ Pb
5% = Current payment ÷ $800
The Current payment is $40
Now the yield to maturity is
-$800 = $50 ÷ (1 + i) + $1,000 ÷ (1 + i) + $1,040 ÷ (1 + i)
So, i = 30%
The same is to be chosen
Answer:
The debt to equity mix = 74.65% - 25.35%
Explanation:
The computation of the debt to equity mix is shown below:
Debt is
= Mortgages + Bond
= $18 + $35
= $53 million
And, the Equity is
= Retained earnings + Cash in hand
= $5 + $13
= $18 million
Now
Percentage of debt financing
= $53 ÷ ($53 + $18)
= 74.65%
And, percentage of equity financing is
= $18 ÷ ($53 + $18)
= 25.35%
And, finally
The debt to equity mix = 74.65% - 25.35%
