3. A firm has fixed cost of $90.00 and variable costs as indicated in the table below. Complete the table. TP TFC TVC 0 $ 90.00 $ 1 2 3 4 5 6 7 8 9 10 $90.00 $ 50.00 $90.00 $90.00 $ 90.00 $125.00 $ 90.00 $155.00 $90.00 $190.00 $90.00 $230.00 $ 90.00 $275.00 $ 90.00 $330.00 $ 90.00 $395.00 $ 90.00 $470.00 TC AFC AVC ATC MC
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- A special shoe manufacturer ABC Co. has costs of production as follows : Quantity: 0 1 2 3 4 5 6Total Variable Cost ($): 0 50 70 90 140 200 360 Fixed costs are $100 and the price of ABC shoe is $50 (a) The chief financial officer tells the CEO that it’s better to produce only one shoe this month. What could be the reason for this advice by the CFO? What are the firm’s profits at that level of production? Is this the best decision? Explain.ЕОС 13.5B Morgan took $400 000 out of their savings account to start an ice cream stand. The savings account paid 5% interest. In the first year, Morgan sold 12,000 batches of ice cream at a price of $3 each, and incurred costs of $12,000 which involved outlays of money. What was Morgan's economic profit in the first year?C or prouuctiol 13 INCIeaseu. 15. A certain firm has the capacity to produce 840,000 units of product per year. At present, it is operating at 60% of capacity. The firm's annual income is $504,000. Annual fixed costs are $212,000, and the variable costs are equal to $0.392 unit of product. What is the firm's annual profit or loss? Answer: $94,432 profit b. per а. At what volume of sales does the firm break even? What will be the profit or loss at 75%, 85%, and 90% of capacity on the basis of constant income per unit and constant variable cost per unit? bas c.
- 23 A West Coast refinery used the following stocks of oil in a production run of gasoline. The respective costs of these stocks are shown in the adjacent column. Barrels Unit cost Light Arabian crude oil 9,880 $79 High-sulfur Alaskan oil 49,810 55 Methyl alcohol from corn 1,420 85 Texas medium weight crude 19,050 65 The average cost per barrel is, a $62.08 b $60.87 c $59.67 d $58.50Find the Total Cost, Marginal Cost, Total Revenue, Marginal Revenue, and Profit/Loss. Q TFC TVC TC MC TR MC PROFIT/LOSS 0 400 0 100 400 50 200 400 100 300 400 130 400 400 180 500 400 220 600 400 350 700 400 450 800 400 600 price of steel is P150/unita. ABC Company produces 100 pendants per day. The total fixed cost for the plant is $5000 and the total variable cost is $15000 per day. Calculate the average fixed cost, average variable cost, average total cost and total cost at the current output level. b. Calculate Economic profit and Accounting profit from the figures given below for ABC Company. Total revenue $ 500,000 Wages and salaries $ 40,0000 Forgone salary $ 80,000 Interest paid $ 10,000 Forgone rent $ 10,000 Raw materials $ 50,000 Other payments $ 20,000 Forgone interest $7000
- 2. The table below shows a car manufacturer's total cost of producing cars. Review the data provided and answer the questions that follow 国 Q TC TVC AVC AFC ATC MCe $500,000 540,000 e 560,000 e 570,000 e 590,000 e 620,000 660,000 e 720,000 800,000 e 920,000 e 1,100,000 2e 4 to 50 6 ge to 10 For each level of output, calculate the total variable cost [TVC], the average variable cost [AVC), the average fixed cost [AFC], the average total cost [ATC], and the marginal cost [MC]. Show the first calculation for each missing column of data. b. What is this manufacturer's fixed cost? Explain how you derived this. Create a single, well-labeled diagram that shows the manufacturer's AVC, ATC, and MC curves. a. С.Assume the firm can sell its product for $14 each. TR VC AVC TC ATC MC - $2000 100 $1400 $600 $2600 $26.00 $6.00 200 $2800 $5.00 $3000 $15.00 300 $1920 $6.40 $3920 $9.20 400 $5600 3280 $8.20 $13.20 $13.60 A. What are fixed costs? B. If the firm can sell its product for $14, a profit maximizing firm will sell units for a profit/loss/breakeven (circle one) of $A grocery shop is owned by Mr. Moore and has the following statement of revenues and costs: gnideini Revenues edua leoin $250,000 lanignen da $6,000 e odi vd $75,000 ed liw vig Supplies 3w (o Electricity del bas deaiq $25,000 Employee salaries Mr. Moore's salary $80,000 ACu ond Mr. Moore always has the option of closing down his shop and renting out the land for $100,000. Also, Mr. Moore himself has job offers at a local supermarket at a salary of $95,000 and at a nearby restaurant at $65,000. He can only work one job, though. What are the shop's accounting costs? What are Mr. Moore's economic costs? Should Mr. Moore shut down his shop?
- You are currently in a job as a chef in a restaurant earning $100,000 per year. You are considering opening up a restaurant in a building which you currently own. You estimate that, if you wanted to, you could rent out your building for $25,000 per year to another restaurant. Last year, your revenues and expenses from the restaurant were the following: Revenues $400,000Cost of Food $120,000Salaries/Wages $100,000Utilities $25,000Taxes $20,000 What is your accounting profit? Show your calculations What is your economic profit? Show your calculations Assuming that you are indifferent between being a chef or owning a restaurant, should you open up your restaurant? Explain why. Now suppose that instead of owning the building where your restaurant will be located, you had to pay rent of $25,000 per year for the building. Will your answers to parts 1-3 change? Show your calculations. Explain how and why your answers will change or…How to Determine "Accounting Profit"Output (unit) Total cost (RM) Total fixed cost (RM) Total variable cost (RM) Average fixed cost (RM) Average variable cost (RM) Average total cost (RM) Marginal cost (RM) 0 600 600 - - - - - 10 1050 600 450 60 45 105 45 20 1450 600 850 30 42.5 72.5 40 30 1800 600 1200 20 40 60 35 40 2100 600 1500 15 37.5 52.5 30 50 2450 600 1850 12 37 49 350 60 2850 600 2250 10 37.5 47.5 40 70 3300 600 2700 8.57 38.57 47.14 45 80 3850 600 3250 7.5 40.625 48.125 55 90 4500 600 3900 6.67 43.34 50 65 100 5250 600 4650 6 46.5 52.5 75 Which time period is the firm operating? Why?