Under absorption costing, a portion of fixed manufacturing overhead is allocated to each unit of product. Variance analysis A variance analysis details and evaluates the difference between planned and actual results. A variance analysis is used to provide a comparison of budgeted costs with the actual costs or a comparison of the
This amount is transferred to finished goods inventory and is used to calculate cost of good sold. From the schedule of cost of goods manufactured, I can tell the cost structure of SMC mainly include direct material, direct labor, and manufacturing overhead. Adding or reducing any product mix will eventually impact the cost of goods manufactured. For example, when we reduce labor cost of $40,000, the cost of goods manufactured is reduced to $1,289,375 compared to the original data of $1,329,375. The schedule of cost of goods sold shows the cost of goods manufactured will positively affect the number cost of goods sold, reducing $40,000 labor cost eventually save $40,000 of cost of goods sold.
INCOME ELASTICITY OF DEMAND Income is a factor that can help to determine how much or how many units a product or service can sell in a determined period of time. Thus, changes in income are important to be monitored, as well as understanding the kind of good we have. To do this, we use Income elasticity of demand (Ey) which measures the effect of a change in income in quantity demanded. The basic formula for calculating the coefficient of income elasticity is: Percentage change in quantity demanded of a good divided by the percentage change in real consumers' income. Depending in the result of this equation the good can be thought as a normal good when the result is > 0 (positive income elasticity), or an inferior good when the result is < 0 (negative income elasticity).
The Demand for Labour Firms demand for labour by offering wages. The demand for labour is a derived demand as they are derived from the demand for goods and services. Higher the production level, higher the demand for labour. The demand for labour is also dependant on the price of labour (wages).Lower the wages, higher the demand for labour by employers. The Output of the Firm As the demand for labour is a derived demand it is significantly dependant on the level of a firms output.
Vertical Integration and its effects on factors leading to firm’s performance 1. Introduction The great distance between the idea of a product and this product being delivered to the customer who buys it has forced firms to cooperate. Cooperation reduces the costs they face at each step of the production and delivery process. However, firms not only cooperate, they also expand by integrating other firms that have an activity related to a higher (upstream) or lower (downstream) stage in the production process than the original firm, this is known as backward or forward vertical integration respectively. Another type is the balanced vertical integration, which means that the firm owns all the components involved in the production, from the raw materials to the delivery in the market.
Autumn Assignment- Demand and Price Elasticity of Demand Part A Price elasticity of demand is a measure of the sensitivity of demand for a product to changes in its price. (Evan Davis et.al. 2003) An elastic demand means that the quantity demanded is responsive to changes in price; inelastic meaning that the quantity demanded is unresponsive to changes in price. PED can be measured by dividing the percentage change in quantity demanded by the percentage change in price. There are a number of factors effecting price elasticity of demand, the overriding determinant being the availability of substitute goods to the consumer, the more that are made available, the higher the elasticity is likely to be as buyers can easily switch from one product to another.
(4 marks) c) Setting MRS=MRT, solve the resulting equation algebraically for l as a function of G. (6 marks) d) What happens to consumption, wages and output as G increases? (6 marks) Question 2: Now consider the same representative agent, but subject to a proportional tax, so that the budget constraint is now C = (1 − t) z (1 − l) where t is the tax on wages. Assume z=1. a) Solve for labour supply as a function of t. (6 marks) b) Now assume that there is a target level of government spending, with a balanced budget: G = tz(1 − l) What is the value of t that maximizes tax revenue G? (6 marks) 1 City University London Intermediate Macroeconomics 1 Joe Pearlman c) Sketch the Laﬀer curve for values of t from 0 to 1.
The supply curve is given by: P = 100 + ½Q , where P measures the price of the good (measured in dollars per unit) and Q represents the quantity of the good (measured in units per week). a. Find the equilibrium price and quantity for this market. Graph demand and supply, noting the relevant intercepts and the equilibrium P and Q. (assume that partial units can be produced) b.
Economics Using a diagram explain how the government can use fiscal policy to alter the level of A.D (aggregate demand) in the economy? * Aggregate demand is the total spending on goods and services in a given time period. Aggregate demand curve has the total quantity of all goods and services and average price levels for all goods and services. The aggregate demand curve shows the relationship between Average Price Levels and Real Output. The Components for Aggregate Demand are C (consumption)+ I (income)+ G (government spending)+ (X-M) (net exports) and a change in the components of Aggregate demand will cause a shift of the curve.
The RRR can also be called as the discount rate, hurdle rate or the opportunity cost of capital. NPV takes into account the principle in economics referred to as the “time value of money” which implies that a dollar earned today is more valuable than a dollar earned tomorrow. It is to be noted that projects with zero or positive NPV are acceptable to a company from a financial viewpoint as the return from these projects equals or exceeds the cost of capital. Internal rate of return (IRR) is the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equal zero. IRR represents the discount rate at which the present value of the expected cash inflows from a project equals the present value of the expected cash outflows.