18. On a small tropical island, two firms draw onthe same supply of labor and capital. The first_firm produces fish, and in the fishing industrythe marginal product of labor is 8 and the mar-ginal product of capital is 5. The second firmproduces coconut, and in the coconut industrythe marginal product of labor is 64 and the mar-ginal product of capital is 32.a. Show that the allocation of labor and capitalbetween the two industries is inefficient.b. Suggest a reallocation of labor and capital thatwill enable the island to produce more fish andcoconuts without using more resources.

Given:Fishing Industry:Marginal product of labor (MPLF) = 8Marginal product of capital (MPKF) =…

Answered: 18. On a small tropical island, two…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 8PA: Jakarta Company is a service firm with current service revenue of $400,000 and a 40% contribution...

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The differential cost of producing product y is?
Jakarta Company is a service firm with current service revenue of $400,000 and a 40% contribution margin. Its fixed costs are $80,000. Maldives Company has current sales of $6,610,000 and a 45% contribution margin. Its fixed costs are $1,800,000. What is the margin of safety for jaka rta and Maldives? Compare the margin of safety in dollars between the two companies. Which is stronger? Compare the margin of safety in percentage between the two companies. Now, which one is stronger? Compute the degree of operating leverage for both companies. Which company will benefit most from a 15% increase in sales? Explain why. Illustrate your findings in an Income Statement that is increased by 15%.
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The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A Machine B 0 $ 49,000 $ 59,000 1 11,800 11,600 2 11,800 11,600 3 11,800+ replace 11,600 4 11,600 replace These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 12% real discount rate and ignore taxes. Note: Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places. b. Which machine should Borstal buy? c. If there is steady 6% per year inflation, what will be the annual rental payment for machine B for the second year? Note: Enter your answer as a positive value rounded to 2 decimal places. a. Machine A a. Machine B b. Which machine should Borstal buy? c. Year 2 rental…
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