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Use the information below to prepare the bank reconciliation for EEE Electric for the month of September Answer

The bank account as a control device that helps to protect cash. One of the requirements is to conduct periodic bank statement reconciliations. Using the following data, complete the bank statement reconciliation. (Use the format shown on page 251 of your textbook.)

Use the information below to prepare the bank reconciliation for EEE Electric for the month of September.
•The bank statement indicated bank service charges of $63.
•Outstanding checks as of September 30 amounted to $1,405.
•Deposits in transit as of September 30 amounted to $2,769.
•The ending balance per the September bank statement is $40,653.
•EEE’s bookkeeper mistakenly recorded a $1,610 cash disbursement as $1,160 for Office Supplies on check #2402.
•The bank mistakenly recorded a deposit of $2,800 as $280 on February 17.
•The bank made an EFT payment on behalf of the company for Insurance for $3,200.
•Bank collected rent of $3,000 and a note, for $16,450, including interest of $450.
•The ending cash balance per the books for September before any adjustments was 28,800.

 

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Markland Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding new equipment Answer

S 7.17
Markland Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding new equipment. Two vendors have presented proposals. The fixed costs for proposal A are $50,000, and for proposal B, $70,000. The variable cost for A is $12.00, and for B, $10.00. The revenue generated by each unit is $20.00.

S 7.18
Using the data in Problem S7.17:
a) What is the break-even point in dollars for proposal A if you add $10,000 installation to the fixed cost?
b) What is the break-even point in dollars for proposal B if you add $10,000 installation to the fixed cost?

S 7.30
What is the net present value of an investment that costs $75,000 and has a salvage value of $45,000? The annual profit from the investment is $15,000 each year for 5 years. The cost of capital at this risk level is 12%.
S 7.31
The initial cost of an investment is $65,000 and the cost of capital is 10%. The return is $16,000 per year for 8 years. What is the net present value?

 

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You are operating a firm in a perfectly competitive market. In the short run, you have fixed costs of $30 Answer

You are operating a firm in a perfectly competitive market.  In the short run, you have fixed costs of $30.  Your variable costs are given in the following table:

Q TVC Tc MC
0 0 30  
1 70 100 70
2 120 150 50
3 150 180 30
4 190 220 40
5 270 300 80
6 360 390 90

Complete the following table:

Market Price Profit maximizing level of output Profit
$48  4 48*4 -220= -28
$52  4  52*4-220=-12
$75  4 4*75-220=80
$85  6 6*85-390=120

 

2.

(10 Points) A monopolist faces a demand curve given by:

P = 105 – 3Q, where P is the price of the good and Q is the quantity demanded.  The marginal cost of production is constant and is equal to $15.  There are no fixed costs of production.

  1. A) (2 points) What quantity should the monopolist produce in order to maximize profit?

Equate Mr with MC

TR= 105Q-3Q^2

Mr=105-6Q

105-6q=15

Q=90/6= 15

  1. B) (2 points) What price should the monopolist charge in order to maximize profit?

P= 105-3*15 = 60

  1. C) (2 points) How much profit will the monopolist make?

Profits= Tr-Tc = 60*15 -15*10= 750

  1. D) (2 points) What is the deadweight loss created by this monopoly (hint: compare the monopoly outcome with the perfectly competitive outcome).

In perfect competition P= MC

105-3Q=15

Q= 90/3= 30

Deadweight loss= ½ *( 30-15)*( 60-10)= 375

  1. E) (2 points) If the market were perfectly competitive, what quantity would be produced?

Q= 30 as shown above

 

 

3.

(6 Points) List the three conditions that must be met in order for a firm to successfully engage in price discrimination.

  • Seller must be a monopolist/ a firm with sufficient market power.
  • The different markets must be segregated so that cross selling is not possible
  • The consumers in different markets must have different demand elasticities. (12 Points) Suppose a competitive firm can sell its output for $6 per unit.  The following table gives the firm’s short run production function.
  • 4.
Labor Output Marginal output MRP = Mp*P
0 0    
1 20 20 20*6=120
2 50 30 180
3 90 40 240
4 110 20 120
5 120 10 60
6 124 4 24

In the table below, you will determine several points on the firm’s demand curve for labor.  To do this, you must determine how many workers the firm should hire for different values of the wage rate in order to maximize profit.  Complete the table below:

The rule is to hire till MRP > wage rate. When wage exceeds MRP we must not hire the last worker.

Take w= 80, MRP= 60 with 5 workers and 120 with 4 workers. The 5th worker will not be taken as MRP < wage. So at q= 80 only 4 are taken.

Wage Rate Per Worker Quantity Demanded of Workers
$50  5
$80  4
$100  4
$150  3