The following information is available for Wonderway, Inc., for 2018: Factory rent $ 28,300 Company advertising 20,200 Wages pai
1 answer:
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Answer:
correct option is b. $ 30
Explanation:
given data
overhead cost = $15,000
direct labor hours = 5,000
required direct labors hours = 10
solution
we get here Fixed Overhead Rate that is
Fixed Overhead Rate = estimated overhead cost ÷ direct labor hours ........1
Fixed Overhead Rate =
Fixed Overhead Rate = $3 per labor hour
and
Job overhead applied express as
overhead = Fixed Overhead Rate × required direct labors hours ..........2
overhead = $3 × 10
overhead = $30
so correct option is b. $ 30
Answer:
Explanation:
A.) Answer to question A is attached.
B.) The price of the pie is $10 according to the question. Please note that in a competitive market, a firm produces that level of output at which price equals MC. I.e P = MC. Where there is no such output, then it will produce up to the level in which P>MC.
Therefore, price(P) is equal to MC, P = MC up to the production of 5 pies.
So, producers in the market = 300 ÷ 5
= 60.
Profit = ( 5 × 10 ) - ( 5 × 7.8 )
= 50 - 39
= $11
Therefore, at a price of $10, 300 pies are sold in the market. Each producers makes 5 pies, so there are 60 producers in the market, each making a profit of $11.
C.) In a competitive market, and in the long run, price = minimum ATC.
Here, the minimum ATC is $7, but the price is $10.
The above means that the market is not in the long run equilibrium because price (P) is not equal to the minimum ATC. Thus in the long run, more firms will enter the market until the price equals ATC.
D.) Producers operating = 600 ÷ 2
= 300
It therefore means that in the long run, each producer earns a profit of $0. The market price is $7, while at this price, 600 pies are sold in the market, and each producer makes 2 pies , hence there are 300 producers in operation.
