Answer: a. less than 50 utils.
b. Sean's marginal utility has become negative.
c. fewer times
Explanation:
Utility is the satisfaction derived from consuming a good or service. Marginal Utility is the added satisfaction a consumer gets when he/she consumes an additional unit while the total utility is the sum of how satisfied he/she is after consuming a given number of units.
Marginal utility reduces with every extra unit taken. So Sean's marginal utility of riding the Twisty River the second time is likely less than that of the first time. Consider when you are very thirsty and you take the first sip of water. This is the most satisfying sip and the last one you take is the least satisfying.
As long as marginal utility is positive, total utility will increase. Imagine Sean gets a marginal utility of 50, 40, 30 and 10. The total utility is then 50, 90, 120 and 130 after every ride. If after the fifth ride, his total utility is 115, it means his marginal utility has become negative (maybe he threw up).
Because marginal utility reduces with every additional unit taken, Sean is not likely to keep spending the same amount of money when he is not getting the same amount of satisfaction so he will likely ride the Twisty River fewer times.
Answer:
Calculation of Avoidable Cost:
Direct Materials $3.40
Direct Labor
8.00
Variable manufacturing overhead 8.50
Supervisor's salary 3.90
Total Avoidable Cost $23.8
Note: Depreciation is a sunk cost and not relevant for decision making.
General Fixed Overhead will remain the same irrespective of decision. Hence, not relevant for decision making.
Evaluation of offer:
Loss on Sale from outside supplier (26.70-23.8)*15,500 $(44,950)
Additional Segment Margin earned $27,500
Financial Advantage/(Disadvantage) $(17,450)
Hence, annual financial disadvantage for the company as a result of buying part U16 from the outside supplier = $17,450
Answer: Nontariff barriers
Explanation:
Nontariff barriers are trade barriers that are used whereby the import and export of goods and services are restricted. It should be noted that the restriction is not by tariffs but can include include embargoeds, quotas, sanctions, and levies.
The main reason for trade barriers are to generate revenue for the government and also to protect the local industries.
Answer:
a. $21,800
Explanation:
The discoun of issuance of the bond is amortized over the period until maturity. Total Interest expesne on a discounted bond is the sum of the coupon payment and the amortization of the discount amount.
Coupon payment = $200,000 x 10% = $20,000 per year
Discount on the bond = $200,000 - $191,000 = $9,000
Discount amotized per year = $9,000 / 5 = $1,800
Total Interest Expense = Coupon Payment + Amortization of Discount
Total Interest Expense = 20,000 + 1800 = $21,800
