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2 years ago

According to the Not Too Big Enough article, what are some of the sources of scale economies in

1 answer:

7 0

According to the "Not Too Big Enough" article, some of the sources of scale economies in the banking and finance industry are as follows:

1. Bigger banks can spread their investment (fixed) costs over more output, thereby reducing the cost per unit and making it impossible for smaller banks to compete in the market. Most often, the smaller banks cannot afford investments in modern banking computing power and systems management.

2. Bigger banks can consolidate banking functions with the elimination of redundancies after each merger and acquisition. The cost of redundancies also gives them economies of scale.

3. Bigger banks have access to larger pools of deposits and will not engage in borrowing at higher costs. Smaller banks cannot tow this line because of their small scale, lacking the required funding mix.

4. Finally, advertising works best where a bank has a large geographic spread. The cost of advertising over a large area is worth it, unlike when a small bank markets its services by advertising.

2. These economies of scale mean that Oligopolies are increasing on Wall Street, and there will be further consolidations of smaller banks. Of course, every small bank would like to engage in mergers and acquisitions to grab a share of the scale economies.

Thus, as banks grow large, they should be mindful that enjoying the scale economies comes with the risk of crumbling like the banks regarded as "too big to fail" when they build on a pack of cards.

Learn more: brainly.com/question/3156270

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Given the following information, prepare an income statement for the Dental Drilling Company.

dmitriy555 [2]

Answer:

Results are below.

Explanation:

Giving the following information:

Selling and administrative expense $90,000

Depreciation expense 75,000

Sales 621,000

Interest expense 46,000

Cost of goods sold 231,000

Taxes 50,000

With the information listed above, we need to make an income statement following the structure below:

Sales= 621,000

COGS= (231,000)

Gross profit= 390,000

Selling and administrative expense= (90,000)

Depreciation expense= (75,000)

Interest expense= (46,000)

Eearning before taxes (EBT)= 179,000

Taxes= (50,000)

Net operating income= 129,000

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2 years ago

7. Gold Company has budgeted the following costs for the production of its only product: Direct Materials $75,000 Direct Labor 5

STatiana [176]

Answer:

$68 = unitary variable cost

Explanation:

Giving the following formula:

Gold Company wants a profit of $100,000

Production= 2,500 units

Selling price= $125

Fixed indirect production costs 27,500

Fixed selling and administrative costs 15,000

To calculate the target total unitary variable cost, we need to use the following formula:

number of units sold= (desired profit + fixed costs) / (selling price - unitary variable cost)

2,500= (100,000 + 27,500 + 15,000) / (125 - unitary variable cost)

312,500 - 2,500unitary variable cost = 142,500

170,000 = 2,500unitary variable cost

$68=unitary variable cost

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Answer:

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Explanation:

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2 years ago

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