Costs and Change Essay

Submitted By Itssarah14
Words: 629
Pages: 3
Open Document
6. (a) Long-run, (b) Short-run, (c) Short-run, (d) Short-run
7. When marginal product is rising, marginal cost is falling. And when marginal product is diminishing, marginal cost is rising. , top to bottom: 15; 19; 17; 14; 9; 6; 3; -1. Average product data, top to bottom: 15; 17; 17; 16.25; 14.8; 13.33; 11.86; 10.25.
Marginal Product is the slope and the rate of change of the TP curve. When TP is rising at an increasing rate, MP is positive and rising. When TP is rising at a diminishing rate, MP is positive and falling. When TP is falling, MP is negative and falling. AP rises when MP is above it and AP falls when MP is below it.
9. (a) Over the 0 to 4 range of output, the TVC and TC curves slope upward at a decreasing rate because of increasing marginal returns. The slopes of the curves then increase at an increasing rate as diminishing marginal returns occur.
(b) The ATC curve falls when the MC curve is below it; the ATC curve rises when the MC curve is above it. The MC curve must intersect the ATC curve at its lowest point. The same for the minimum point of the AVC curve.
(c) The AVC and MC curves are not affected by changes in fixed costs. If TVC has been $10 less at each output, MC would be $10 lower for the first unit of output but remain the same for the remaining output. The AVC and ATC curves would also be lower by an amount equal to $10 divided by the specific output.
10. (a) MC no change; AVC no change; AFC shift down; ATC shift down.
(b) MC shift up; AVC shift up; AFC no change; ATC shift up.
(c) MC shift down; AVC shift down; AFC no change; ATC shift down.
(d) MC no change; AVC no change; AFC shift up; ATC shift up.
(e) MC shift up; AVC shift up; AFC no change; ATC shift up. -Explain the difference between fixed and variable costs: Fixed cost is the cost which is not attributable to the production volume i.e. fixed in the sense of production volume means remain constant even production is zero. Fixed cost Examples: rent building, light bill. Variable cost is that the change in total proportionality with changes in the level of activity. Variable cost Examples: fuel, material handling, and hourly
Show More

Related Documents: Costs and Change Essay

Forest Hill Report Final Draft Essay

it is evident that the current system is not allocating costs appropriately for production. Only grades A and C need slitting, and currently those costs associated with slitting are being allocated for every grade. All profits related to each grade are being misrepresented because of the current way slitting costs are being allocated. Grade A and C are over stating profits, and B and D are understating profits by adding the slitting costs to them. Out of all the grades, grade D makes the most…

Words 1186 - Pages 5

Questions On Credit Policy

Change in profit before Credit Costs If the sales change or variable costs change and change would also have to occur in profit. = Change in Sales * (1-VC) Affects DSO with the change in sales. Opportunity Cost of Investment in A/R = (ADS)*(DSO)*(Var Cost Ratio)*(r) If anything in here changes then the cost of investment in accounts receivable will change. Also changes DSO when one of the variables is changed. Opportunity Cost of Investment in Inventory (Change in Sales…

Words 492 - Pages 2

Essay about Marginal Cost

Profits Name: Institution: Date: Maximizing Profits A. Explain profit maximization from the following approaches: 1. Total revenue to total cost Companies calculate profits by subtracting the total costs from total revenue. For organizations to maximize the total profit, it is required to optimize the difference between the total costs and the total revenues. The practice starts by determining the right quantity of maximizing profits. Companies determine the right price by substituting…

Words 977 - Pages 4

Essay on BUsiness Law

1990s, many have witnessed technological change as any other centuries. I remember beepers, huge computer screens, voicemail machines, CD players, telephone with cords, etc. In a blink of an eye, they have been replaced. Besides the actual product has advanced, the way they’re made has been too. This is known as technological change, a change in the ability of a firm to produce a given level of output with a given quantity of inputs. Technological change can be referred to goods/services and the…

Words 499 - Pages 2

Business: Quality Management Essays

Outsourcing – disadvantages and advantages • Outsourcing involves taking to market those internal business processes and activities that can be done better and at lower cost when given to external vendors. • The term ‘outsourcing’ is often called business process outsourcing (BPO) and captures a range of outsourced business processes including: - finance and accounting outsourcing (FAO) - knowledge process outsourcing (KPO) - legal process outsourcing (LPO). • The outsourcing decision should…

Words 825 - Pages 4

540 Midterm Essay

Midterm 1. Opportunity costs are most simply defined as cost in terms of foregoing alternatives. This means what you potentially lose in making a choice for one thing in a decision. Stella would need to be aware that whatever resources she allocates to paying for the new car, will be removed from using them for other purposes. She should consider how much the car will cost in comparison with the other uses for her funds combined with the cost of another means of transportation. In short, for this…

Words 1293 - Pages 6

Financial Analysis JET-2 Task 4: Activity Based Costing And Manufacturing Mix Report

Recommend whether the company should change its costing method to activity-based costing. Activity Based Costing (ABC) is an accounting methodology which assigns manufacturing costs in a more logical manner by taking into account not only the production costs in terms of machine time and labor but the additional and often hidden costs associated with production. These hidden costs if not properly allocated distort the actual costs of production. The hidden costs which include, engineering, machine…

Words 2058 - Pages 9

Cost Volume Profit Analysis and Costing for the 21st Century Essay

Cost Volume Profit Analysis and Costing for the 21st Century Abstract Cost value is the analysis of different divisions or business units of a firm on the basis of their opportunity cost and economic rent (“Cost value definition”). The objective of cost value is to determine which division or unit should be kept, expanded, sold, or shut down (“Cost value definition”). Cost analysis is an important component of all economic evaluation techniques, especially when it comes to planning and self-assessment…

Words 999 - Pages 4

Cost Accounting Chapter 3

CHAPTER 3 COST-VOLUME-PROFIT ANALYSIS ********************************************************************* 1. Introduction Basic Planning Tool -- Answers “what if?” questions. Examines behavior of total revenues, total costs, and operating income as changes occur in output level, selling price, variable costs per unit, and/or fixed costs. 50% surveyed companies use some form Underlying Assumptions Show Fragility of Model Volume of units produced and sold is the only driver affecting changes in revenue…

Words 589 - Pages 3

Management Accounting and Variable Costs Essay

types of cost information, variable and fixed costs. Variable costs are costs that change when some variable used in the cost to produce a product changes. For example if you were in the business of producing knives, then the price of the metal used to manufacture those knives would be your variable cost. Another variable cost that has to be accounted for in the cost of manufacturing is labor costs and supply costs. So the variable cost for each knife manufactured would equal the variable cost of metal…

Words 491 - Pages 2