Answer:
combined degree: 3,5385
Explanation:
degree of operating leverage:
contribution: Q (sales - variable cost)
150,000 x (30 - 7) = 150,000 x 23 = <u>3,450,000</u>
EBT = contribution - fixed cost - interest expense
3,450,000 - 2,050,000 - 425,000 = <u>975,000</u>
combined degree: 3,5385
Answer:
<u>4 bushels, 2 bushels, Bellisima, Euphoria</u>
Explanation:
Remember, opportunity cost as used in this context<em> refers to the loss of other profit alternatives when one alternative is chosen</em>. In this scenario if we consider the two neighboring countires called Acadia and Euphoria. Both have 4 million labor hours per month that they can use to produce corn, jeans, or a combination of both.
Euphoria produces <em>4 bushels of corn per hour and 16 pairs of jeans</em><em>. </em>Acadia produces<em> 5 bushels of corn per hour and 10 pairs of jeans.</em> Euphoria produces <em>12 million bushels of corn and 16 million pairs of jeans</em> and Acadia produces <em>5 million bushels of corn and 30 million pairs of jeans.</em>
<em></em>
<u>Euphoria's opportunity cost of producing one bushel of corn is</u> = 4 pairs of jeans and
<u>Acadia's cost of producing one bushel of corn is </u>= 2 pairs of jeans.
Finanlly, It is obvious that Acadia has the comparative advantage of producing corn, and Euphoria has the comparative advantage of producing jeans.