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sdas [7]
3 years ago
12

Companies A and B are in the same industry and are identical except for cost structure. At a volume of 50,000 units, the compani

es have equal net incomes. At 60,000 units, Company A's net income would be substantially higher than B's. Based on this information,
A. Company A's cost structure has more variable costs than B's.
B. Company A's cost structure has higher fixed costs than B's.
C. Company B's cost structure has higher fixed costs than A's.
D. At a volume of 50,000 units, Company A's magnitude of operating leverage was lower than B's.
Business
1 answer:
ASHA 777 [7]3 years ago
5 0

Answer:

B. Company A's cost structure has higher fixed costs than B's.

Explanation:

Let's see the formula for income:

50,000 units x sales price - variable cost x 50,000 - fixed = net income

50,000 (sales - variable) - fixed = net income

At 50,000 both have equal net income.

Also we are given the fact that their sales is the same.

"identical except for cost structure"

So:

50,000 (S-V_a)-Fixed_a = 50,000 (S-V_b)-Fixed_b

We work it and remove sales from the equation:

50,000S-50,000V_a-Fixed_a = 50,000S-50,000V_b-Fixed_b

-50,000Variable_a-Fixed_a = -50,000Variable_b-Fixed_b

At 60,000 units, Company A has a higer income, so the increase of variable cost in company A is lower than company B

The cost of 10,000 more units is all variable cost, if Company A has more income, then their variable are lower.

If variable cost for 10,000 is lower, same applies for the variable cost for 50,000 so we have:

10,000Va < 10,000 Vb

50,000Va < 50,000Vb

So to have equal income at 50,000 units.

Fixed of A > Fixed of B

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matrenka [14]

Answer:

rationalization: (1) the action of attempting to explain or justify behaviour or an attitude with logical reasons, even if these are not appropriate.

(2)the action of making a company, process, or industry more efficient, especially by dispensing with superfluous personnel or equipment.

prototyping : (1)an experimental process where design teams implement ideas into tangible forms from paper to digital.

design determination : (1) Design and determination are semantically related in aim topic. Sometimes you can use "Design" instead a noun "Determination".

Explanation:

examples:-

(1) rationalization : a person who is turned down for a date might rationalize the situation by saying they were not attracted to the other person anyway. A student might blame a poor exam score on the instructor rather than their own lack of preparation.

(2) prototyping : cognitive representation of something within a certain category. ... So if you see another dog, you could say that other dog is small (compared to your prototype), heavy, ugly, beautiful, etc.

(3) design determination : testing a new depression medication

5 0
3 years ago
An agreement between Jim and his 18-year-old daughter, Betty, provides that he will give her $25,000 if she does not marry until
Mariulka [41]

Answer:

No, Jim is not correct.

Explanation:

Betty will win this case.

Generally, the law encourages marriage as its policy. If there is any contract that prevent or restrict marriage in whatever way, such contract would be considered null and void because it is against the public policy.

Despite the above, contracts will be generally considered valid when they place reasonable restrictions on marriage. In this question, the restriction placed on Betty that she should get married until after her 22nd birthday is reasonable and has to be considered to be valid. Based on this, Betty has to be paid the $25,000 as laid down in the binding contract between the two parties.

Therefore, Jim is not correct.

4 0
3 years ago
In the United States, personal success and professional achievement are important motivators, and promotions and increased earni
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People are often motivated to achieved anything. In the United States, personal success and professional achievement are important motivators is a true statement.

  • The universalist assumption is based on the fact that the motivation process is universal and that all people are motivated to run after goals that they value.

Culture often affects specific content and goals, the specific nature of motivation is different in all cultures.  in China, group affiliation; goal, social harmony are motivations for pursuing goals.

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4 0
3 years ago
A workplace is where people
Bingel [31]
I believe the answer is yes? I don’t understand the context behind this
5 0
2 years ago
Read 2 more answers
True or False: Marginal analysis involves comparing the additional or extra benefit derived from consuming an additional unit of
Likurg_2 [28]

Answer:

True

Explanation:

Marginal - the dictionary meaning of such word is additional of anything. Here, in the given case, marginal analysis as per costing is the analysis of each additional revenue from each additional sale or production.

Marginal analysis does not consider fixed cost generally, as that is fixed and don not add on on additional units, within a standard range.

Thus, the statement stated here is True.

7 0
3 years ago
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