Answer:
(a) Continue to operate.
(b) Shut down
(c) Continue to operate.
Explanation:
(a) It is given that the firm will experiencing a loss of $5000. Therefore, it means that a loss of $5,000 is borne by the producer of the fixed cost. It is a portion of fixed cost but the firm will continue to operate in the short run if it covers all of the variable cost in the short run.
(b) The firms in the long run try to cover all of its variable and fixed cost. If this situation persists then this firm unable to cover its all costs. Therefore, the firm will shut down its operation and go out of the business.
(c) Now, if the firm’s fixed costs are $2,000.
There is a reduction in the fixed cost by $6,000
Previously firm able to cover = $8,000 - $5,000
= $3,000
It means that it cover its fixed cost and hence, the firm will operate in both short run and long run.
Answer:
O $ 900,000
Explanation:
When a fee is received in advance for a service yet to be rendered, the revenue for such fee is said to be unearned. The entries required are
Debit Cash account and Credit Unearned fees or deferred revenue.
As the service is performed and the revenue is earned, debit Unearned fees and credit revenue.
Given that
- the specialized directory that is published semiannually and shipped to subscribers on April 15 and October 15 and
- Subscriptions received after the March 31 and September 30 cutoff dates are held for the next publication and
- Cash from subscribers is received evenly during the year and is credited to deferred subscription revenue
The amount to be deferred is the sum of the amounts collected after September 30 (from October to December year 2
= 3/12 * $3,600,000
= $900,000
Answer:
B. total revenue will decrease.
Explanation:
The initial revenue for breakfast cereal is given by the product between the price of cereal (P) and the demanded quantity (D):
After a 25% decrease in price and a 20% increase in demand, the new revenue will be:
The new revenue is 90% of the original revenue; therefore, total revenue will decrease.
