Kahn Company paid $240,000 to purchase a machine on January 1, Year 1. During Year 3, a technological breakthrough resulted in t
he development of a new machine that costs $300,000. The old machine costs $100,000 per year to operate, but the new machine could be operated for only $36,000 per year. The new machine, which will be available for delivery on January 1, year 3, has an expected useful life of four years. The old machine is more durable and is expected to have a remaining useful life of four years. The current market value of the old machine is $80,000. The expected salvage value of both machines is zero. Required:
Based on this information, recommend whether to replace the machine. Support your recommendation with appropriate computations.
In order for the coffee shop to break even ,it must serve the number of customers that could enable it must cover all fixed monthly costs i.e lease payment of $3,200,basic utility costs of $600 as well as the wages of the two employees which sums to be $3,400($10*170*2)
Breakeven number of customers=fixed costs/(revenue per customer-variable cost per customer)
total fixed costs=$3,200+$600+$3,400=$7200
revenue per customer is $7
variable of serving a customer is $2
breakeven number of customers=$7,200/($7-$2)=1,440 customers
not excludable, people have an incentive to be free riders. (b.)
Excludability of a good or service is a property of the good or service that makes it impossible for a consumer who has not paid for it to have access to it, hence, a non-excludable good or service is one to which it is impossible to prevent access by people who have not paid for it.
Based on whether goods are excludable or non-excludable, goods can be divided into four categories; private goods, common-pool goods, club goods and public goods.
Public goods: public goods are also called collective goods or social goods. Example here are public parks, street lights, air, etc. In addition to being non-excludable, public goods are also non-rivalrious, meaning that the use of the good by one person does not limit the use by another, hence the free rider incentive applies.
For a better understanding, I suggest you look up the other types of goods I mentioned above.
The correct answer is letter "B": bottom-up approach.
The bottom-up budgeting approach is to give each department within a firm the power to set and control their budget according to the projects that the department intends to develop in line with the organization's ultimate goal. It may be beneficial as each department is likely to have a budget that is better adapted to their needs and promotes employee involvement during the budget determination process.
C. Charles should forgo renter's insurance if the premiums will quickly overtake the value of his belongings.
Renter's insurance is a useful and valuable tool to protect tenants against loss or damage of their property, and is a wise purchase in most cases. However, if you are paying more every month in your insurance premiums than the total value of the goods you are protecting, the insurance may no longer be worth the cost.