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Andrej [43]
3 years ago
13

Jacoby Company received an offer from an exporter for 26,200 units of product at $18 per unit. The acceptance of the offer will

not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $25 Unit manufacturing costs: Variable $12 Fixed $5 What is the differential revenue from the acceptance of the offer?
Business
1 answer:
Leokris [45]3 years ago
3 0

Answer:

The change in revenue (differential revenue from the acceptance of the offer) will be $ 471600

Explanation:

The revenue represents the total sales of the product, regardless of the costs, then If the company produced initially Q units the initial revenue will be

Initial Revenue=total sales= P₁*Q₁

- Since the offer does not alter the domestic sales prices P₁ , the price P₁ remains constant.

- Since the sales does not affect normal production , the quantity sold to the domestic market Q₁ is also not affected ( i don't need to resign units to the domestic market to sell to the exporter)

then

New revenue= Revenue from the exporter + Revenue from the domestic market = Revenue from the exporter + Initial revenue

where Revenue from the exporter=P₂*Q₂ , P₂= price sold to the exporter and Q₂= units sold to the exporter

therefore the change in revenue will be

Change in Revenue= New revenue - Initial Revenue =   Revenue from the exporter

Change in Revenue=P₂*Q₂=$18 /unit* 26200 unit = $ 471600

Note:

The profit represents the revenue, taking into account the costs. Then the change the initial profit will be

initial profit =  P₁*Q₁ - (CF+CV*Q₁)

the New profit

New profit = P₂*Q₂+ P₁*Q₁ - [CF+CV*(Q₂+Q₁)]

and the change in profit

change in profit= New profit - initial profit =   P₂*Q₂+ P₁*Q₁ - [CF+CV*(Q₂+Q₁)] -[P₁*Q₁ - (CF+CV*Q₁)]= P₂*Q₂ - CV*Q₂ = (P₂- CV)*Q₂ = ($18 /unit-  $12 /unit)* 26200 unit = $ 156000

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. Distinguish between the short run and the long run as they relate to macroeconomics. Why is the distinction important
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1. In the short run, wages and other prices are stagnant making the economy to run below or above the normal level. In the long run, wages and prices are fully flexible, and this allows the economy to run at its natural level.

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Stickiness or stagnancy of wages can be seen in the fact that it is most time difficult to fluctuate or change the wages of workers overtime. The prices of most goods are also sticky when they remain unchanged over a given period of time. These conditions exist in the short run, and make the economy to run above or below its full potentials. The real GDP and unemployment levels are negatively affected.

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Explanation:

Given:

Amount invested (p) = $4,000

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Computation of amount from simple interest method:

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