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:
The correct answer is Variable Cost.
Explanation:
According to the scenario, the rent and manager salary is fixed, so, it is under fixed cost.
Whereas, Cost of supplies ( i.e. napkins, bags and condiments) are variable according to the number of customer. As the number of customer increases, cost of supply also increases and as the number of customer decreases, cost of supply also decreases.
This type of cost is known as Variable cost,
Hence, The cost of supply is Variable cost in the given scenario.
Answer:
Operating profit margin = 25.71%
Explanation:
Amount of return on asset = Rate of return x Asset value
Amount of return on asset = 15% x $300,000,000
Amount of return on asset = $45,000,000
Operating profit margin = Amount of return on asset / Sales
Operating profit margin = $45,000,000 / $175,000,000
Operating profit margin = 0.257143
Operating profit margin = 25.71%
Answer: 3
Explanation:
The marginal rate of substitution simply means the rate at which one good will be exchanged for another good based on the current market price.
Since you like servants three times as much as robots, this implies that the utility that one gets from one servant is exactly like the utility that will be gotten from three robots.
Therefore, the utility function will be:
U = 3X + Y
Then, the marginal rate of substitution will be:
= MUX/MUY
= 3
