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The firm currently uses 70 workers to produce 300 units of output per day. The daily wage (per worker) is $100, and the price of the firm’s output is $30. The cost of other variable inputs is $500 per day. Although you don’t know the firm’s fixed cost, you know that it is high enough that the firm’s total costs exceed its total revenue.

Provide a 1-2 page report to management of the firm as to whether or not it should continue to operate at a loss? Be sure to show your work to support the deicision you outlined in your report.

The firm’s daily revenues are $30/unit * 300 units = $9000. In contrast, the firm’s variable expenses are only $100/worker * 70 workers + $500 = $7500. This implies that the firms fixed expenses exceed $1500/day, else the firm would be making a profit. However, since the fixed expenses do not change with the number of items sold, and the variable expenses are less than the revenues, it follows that increasing the firm’s output will cause the firm’s profits to increase in direct proportion to the output. Therefore, there must be some point at which increasing the firm’s output will cause it to be profitable, and thus if the firm can be expanded to that point and assured of selling all its units, it should definitely remain in operation and be so expanded. If it cannot be so expanded, then it should be closed down, unless the fixed costs of operation cannot be avoided by closing the firm (for instance, the fixed costs include tax on a building which is essentially unsaleable), in which case it should remain open anyway, as the revenue from the firm will partially mitigate the fixed costs which must be paid anyway.

Suppose your elasticity of demand for your parking lot spaces is -0.5, and the price is $20/day. If your MC is zero, and your capacity at 9 A.M. is 96% full over the last month, are you optimizing?

In this case, you are optimizing yield and not revenues. A couple of things give this away:
1) your elasticity of demand is between -1 and 0, so it is inelastic. This means that demand changes not so much when you change price. In this case, companies should be looking to raising prices, knowing that demand will not fall more than the price is going up.
2) the parking lot is at 96% usage (almost 100%) so the company looks like it’s trying to max it’s yield (usage) and probably not revenues.

The proof is in the math. Let’s assume the company has 100 spaces so currently, it’s revenues per day is 96 spaces x $20.

Since the elasticity of demand is inelastic, we should get more revenues by increasing prices. Let’s say you increased prices by 10%, which results in a – 5% reduction in parking lot usage. Then the revenues for this parking lot would be;

96 spaces x 95% X $20 per day X 110%. If you did the math, you would find that the revenues are higher when you raise prices. This confirms that the company is clearly not maximing its revenues and appears to be trying to maximing its yield.

Management are prepare of the organization very good, future, necessary got the profit, won, everything are better way to future is revenue.

1st i would like to ask you , WHERE ARE YOU FROM ? .

2nd for your question ,the management consist from 5 elements :

a . Planing .
b . Organizing .
c . Steering .
d . Controlling .
e . Research and Development .

any management on earth should have these elements on the same arrangement above ,and if the management lost one of these elements it will fail .. want to know more go and read more about this subject cause every thing in life must have a management and the more you know about this the more your life will be easier and more active with much success .

Good Luck .

A Fitness club offers credits toward next year’s dues for new member referrals. Management estimates that these credits will amount to approximately 10% of revenues for the up-coming year. Revenues are now in the range of $2.5 million annually.

What entries would I make to set up the revenue contra account and once a referral happens what does the entry look like?

Also, what does the closing adjusting entry at the end of the accounting period look like?

What entries would I make to set up the revenue contra account and once a referral happens what does the entry look like?
Dr Referral fees expense $250,000
Cr Provision for referral fees $250,000

Once a successful referral occurs,
Dr Provision for referral fees xxx
Cr Unearned club fees revenue xxx

At year-end, you’ll know the actual amount of referrals, so you can work out if the $250k is over- or under-stated. Make the adjusting entry accordingly.

When next year comes and the member’s fee is due to be paid,
Dr Unearned club fees revenue xxx
Cr Club fees revenue xxx

A Fitness club offers credits toward next year’s dues for new member referrals. Management estimates that these credits will amount to approximately 10% of revenues for the up-coming year. Revenues are now in the range of $2.5 million annually.

What entries would I make to set up the revenue contra account and once a referral happens what does the entry look like?

Also, what does the closing adjusting entry at the end of the accounting period look like?

What entries would I make to set up the revenue contra account and once a referral happens what does the entry look like?
Dr Referral fees expense $250,000
Cr Provision for referral fees $250,000

Once a successful referral occurs,
Dr Provision for referral fees xxx
Cr Unearned club fees revenue xxx

At year-end, you’ll know the actual amount of referrals, so you can work out if the $250k is over- or under-stated. Make the adjusting entry accordingly.

When next year comes and the member’s fee is due to be paid,
Dr Unearned club fees revenue xxx
Cr Club fees revenue xxx

If Labor win on Saturday and we have an entire ALP Leadership within States and Federal Politics will this mean the States will start actually co-operating on things like water management, draught relieve, distribution of GST Revenue, Health care etc… Seems to me there is too much interference and mistrust by the States these days and no common goals, working towards a common "NATIONAL" direction.

yep thats the hope, maybe we can lose our national annual blood sport. So we can get things actually done, infrastructure, hospitals and education. streamlining renewable resource goals into national progressive guidelines. Theres a lot of neglect to deal with.

If Labor win on Saturday and we have an entire ALP Leadership within States and Federal Politics will this mean the States will start actually co-operating on things like water management, draught relieve, distribution of GST Revenue, Health care etc… Seems to me there is too much interference and mistrust by the States these days and no common goals, working towards a common "NATIONAL" direction.

yep thats the hope, maybe we can lose our national annual blood sport. So we can get things actually done, infrastructure, hospitals and education. streamlining renewable resource goals into national progressive guidelines. Theres a lot of neglect to deal with.

A study done for management shows that the revenue, R, in dollars, as a function of number, x, of units produced can be modeled by R(x) = 12x – 0.001×2 while the cost, C, in dollars, can be modeled by C(x) = 5000 + 2x. What will the maximum profit be, in dollars?

My initial impulse is to plug C(x) in for all x values in R(x), get the derivative of R(x) and then set it equal to 0. I’m not sure if this is correct or not though.

Profit is equal to revenue minus cost. Define profit function P(x):

P(x) = R(x) – C(x)

P(x) = 12x – 0.001x^2 – 5000 – 2x

P(x) = -0.001x^2 + 10x – 5000

Differentiate the profit function.

P’(x) = -0.002x + 10

Set equal to zero.

0 = -0.002x + 10

0.002x = 10

x = 5000

Maximum profit occurs with 5000 units sold. What is the value of P(5000)?

P(5000) = -0.001(5000)^2 + 10*5000 – 5000

P(5000) = 20,000

Twenty thousand dollars is the maximum profit. Good luck. =)

The management of a watch company has determined that the daily marginal revenue function associated with producing and selling their travel clocks is given by
R’(x)= -0.009x + 12
where x denotes the number of units produced and sold and R’(x) is measured in dollars/unit. Determine the revenue function R(x) associated with producing and selling these clocks.

Some help with this problem is greatly appreciated.

Integral of the equation is

R(x) = -0.0045x^2 + 12x

The project is a rehabilitation centre for the aged. These facilities include activities and rejuvenation procedures for the seniors, which will extend to the disabled, juvenile delinquents and special children such as the autistic. The cash flow will show the feasibility of the project in expenses and revenue anticipated.
We expect superannuation funds management companies to be interested in the synergy aspect. Also new Federal Government incentives make the project viable for the lower end of the market, while the sales to the upper end of the market will optimise the profitability.

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A venture capitalist will probably demand 51% ownership to invest..