Suppose that a firm is considering hiring an employee whose wage would be $100 per hour. This employee's marginal product of labor (per hour) is 5 units and the good produced sells for $65 per unit. Will the firm hire the new employee? OYes ONO How much additional profit (or loss) will the firm generate by hiring this employee? (Make sure to add the negative sign if the firm faces a loss)

Suppose that a firm is considering hiring an employee whose wage would be $100 per hour. This employee's marginal product of labor (per hour) is 5 units and the good produced sells for $65 per unit. Will the firm hire the new employee? OYes ONO How much additional profit (or loss) will the firm generate by hiring this employee? (Make sure to add the negative sign if the firm faces a loss)

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 4QE: Suppose you are analyzing a firm that is successfully executing a strategy that differentiates its...

See similar textbooks

Similar questions

Suppose a loyal customer requested to a special order to buy 100 units at $5.50 per unit. This is a one-time only order, the manufacturing company has the capacity to fill this order, and by filling the order no other regular order will go unfilled. Would you fill this order if you were the manager? Why? Is there an opportunity cost associated with this order? Explain. What would be the per-unit profit or loss for filling this order?
Should a firm shut down if its weekly revenue is $450, its variable cost is $600, and its fixed cost is $700, of which $500 is avoidable if it shuts down? Why? The firm should to save $ (Enter a numeric response using an integer.)
A manager is trying to decide whether to buy one machine or two. If only one is purchased and demand proves to be excessive, the second machine can be purchased later. Some sales will be lost, however, because the lead time for producing this type of machine is six months. In addition, the cost per machine will be lower if both are purchased at the same time. The probability of low demand is estimated to be 0.20. The after-tax net present value of the benefits from purchasing the two machines together is $80,000 if demand is low and $180,000 if demand is high. If one machine is purchased and demand is low, the net present value is $110,000. If demand is high, the manager has three options. Doing nothing has a net present value of $110,000; subcontracting, $160,000; and buying the second machine, $130,000. a. Choose the correct decision tree for this problem. Note that each payoff is given in thousands of dollars.
A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 5 percent. This firm is earning $5.50 on every $50 invested by its founders. What is its percentage rate of return? Is the firm earning an economic profit? If so, how large? Will this industry see entry or exit? What will be the rate of return earned by firms in this industry once the industry reaches long-run equilibrium?
Q1.Determine the production plan that will maximise the weekly profit of MJD Ltd and prepare a profit statement showing the profit your plan will yield. Q2.The marketing director of MJD Ltd is concerned about the company’s ability to meet the quantity demanded by its customers. Two alternative strategies are being considered to overcome this: To increase the number of hours worked using the existing machinery by working overtime. Such overtime would be paid at a premium of 50% above normal labour rates, and variable overheads costs would be expected to increase in proportion to labour costs. To buy product B from an overseas supplier at a cost of £19 per unit; which includes the cost of delivery. This purchased product would need to be repackaged at a cost of £1 per unit before it can be sold Evaluate each of the two alternative strategies and write a report to the marketing director discussing which strategy should be adopted.
1. Assume a class needs to pay all expenses. The instructor cost $3,000 with an additional administrator cost of $50 per student. Tuition is $600 per student for the course. What is the minimum number of students that need to sign up for the course to run? 2. If firm’s total revenue is $20 million, its fixed costs are $12 million, and its variable cost are $22 million what is its profit? Should the firm shut down or stay in business in the short run? Would the decision change if the Total Revenue was $30 million instead of $20? 3. As the firm’s output expands, explain why the ATC and AVC get closer together.
The Lamar Company manufactures wiring tools. The company is currently producing well below its full capacity. The Boston Company has approached Lamar with an offer to buy 15,000 tools at $1.80 each. Lamar sells its tools wholesale for $1.90 each; the average cost per unit is $1.88, of which $0.32 is fixed costs. If Lamar were to accept Boston's offer, what would be the increase in Lamar's operating profits? Multiple Choice O O $1,500. $5,100. $1,200. $3,600.
A firm in a perfectly competitive industry has a typical cost structure. The normal rate of profit in the economy is 6 percent. This firm is earning $15 on every $150 invested by its founders. Instructions: Enter your answers as whole numbers. a. What is its percentage rate of return? percent. b. Is the firm earning an economic profit? (Cick to select) If so, how large? O percent. c. Will this industry see entry or exit? (Click to select) d. What will be the rate of return earned by firms in this industry once the industry reaches long-run equilibrium? O percent.
Assume that a firm produces an industrial product of a variable cost of $8,500 and has fixed costs of $ 25,000 per week ,currently the firms sells 20 units per week priced at $ 10625 per unit . What is the current profitability of the firm? What is the improvement to profitability if variable costs are reduced by 1 percent holding all else constant? What is the improvement to profitability if fixed costs are reduced by 1 percent ,holding all else constant ?what is the improvement to profitability if units sold are increased by 1 percent on average ,holding all else constant? What is the improvement to profitability if the price is increased by 1 percent holding all else constant? In isolation improving which aspect of the firm will have the largest positive impact on profits?
When prices are rising, would you choose a FIFO or weighted average cost flow assumption? Explain, using an example to support your answer. Would your choice be the same if prices were falling? If employees get a year-end bonus accourding to amount of net income earned during the end of year. Could you please give me an example?
The manufacturer of a product that a variable cost of $2.50 per unit and total fixed cost of $125,000 wants to determine the level of output necessary to avoid losses. a. what level of sales is necessary to break, even if the product is sold for $4.25? what will be the manufacturer's profit or loss on the sales of 1000,00 units? b.If fixed costs rise to $175,000, what is the new level of sales necessary to break even? c.If variable cost decline to $2.25 per unit, what is the new level of sales necessary to break even? d. If fixed cost were to increase to $17,000, while variable cost declined to $2.25 per unit, what is the new break-even level of sales? e. If a major proportion of fixed costs were noncahs (depreciation), would failure to achieve the break-even level of sales imply that the firm cannot pay its current obligation as they come due? Suppose $100,000 of the above fixed cost $125,000 werre depreciation expense. what level of sales would be the cash break-even level of sales?…
To be profitable, a firm must recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Consider the case of Blue Mouse Manufacturers: Blue Mouse Manufacturers is considering a project that will have fixed costs of $10,000,000. The product will be sold for $37.50 per unit, and will incur a variable cost of $11.25 per unit. Given Blue Mouse’s cost structure, it will have to sell units to break even on this project (QBEQBE).