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Tju [1.3M]
3 years ago
5

Assume that the linear equation for consumption in a closed economy is C = 40 + 0.8Y. Also, assume that income (Y) is RM400 mill

ion.
Determine:     

(a)  the marginal propensity to consume        
(b)  the marginal propensity to save      
(c)  the level of consumption       
(d) the average propensity to consume        
(e)  the level of saving        
(f) the average propensity to save  ​
Business
2 answers:
Gekata [30.6K]3 years ago
7 0

A) the marginal propensity to save is the number associated with y which is 0.8

B) the marginal propensity to save is 1-0.8 = 0.2

C) replace y with the 400 and solve: c = 40 + 0.8(400) = $360

D) Average propensity to consume = 360/400 = 0.9

E) 400-360 = $40

F) 40/400 = 0.1

alex41 [277]3 years ago
7 0

Explanation:

(a)

0.8

(b)

Total - 0.8

1 - 0.8

0.2

(c) c = 40 +0.8(y)

c = 40 + 0.8(400)

c = 40 + 320

c = 360

(d) c/y

360/400

36/40

9/10

0.9

(e) 400 - 360

40

(f) 40/400

4/40

1/10

0.1

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<u>Solution and Explanation:</u>

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Perpetual Inventory System:

1. Cost of Goods Available for Sale and Units Available for Sale:

Mar. 1 Beginning inventory     60 units $50.20 per unit      $3,012

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Available for Sale                440 units            Cost =      $25,083

2. The number of units in ending inventory:

Units Available for Sale 440

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Ending Inventory          130 units

3. The Cost assigned to ending inventory using:

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20 units at $60.20 per unit   = $1,204

110 units at $62.20 per unit  =  6,842

Ending Inventory                    $8,046

b) LIFO: Ending Inventory

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Mar. 25 Purchase 20 units $62.20 per unit   =                  1,244

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c) Weighted Average: Ending Inventory

Cost of Goods Available for Sale divided by units available for sale

= $25,083/440 = $57 per unit

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d) Specific Identification: Ending Inventory

This cannot be answered from the  information provided in the question:

4. Gross Profit for each costing method:

                        FIFO             LIFO         WEIGHTED       SPECIFIC

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Sales               $27,312         $27,312         $27,312            $27,312

Cost of Sales    17,037           17,667            17,670

Gross Profit   $10,275          $9,645          $9,642

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a) Sales:

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Total = $27,312

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i) FIFO

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Mar. 18 Purchase 45 units $60.20                     =            2,709

Cost of Sales = $17,037

ii) LIFO:

Mar. 1 Beginning inventory 15 units $50.20 per unit  = $753

Mar. 5 Purchase 205 units $55.20 per unit   = $11,316

Mar. 25 Purchase 90 units $62.20 per unit   = $5,598

Cost of Sales = $17,667

iii) Weighted Average:

Cost of Sales = $57 x 310 = $17,670

c) Calculations under the specific identification cannot be made because of the figures given under this method.

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