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This is an important figure to know because from this, the revenue price for each product can be calculated. The formula is shown below:
To determine Average Total Cost, we need to add the Total Fixed Cost to the above equation. The Total Variable Cost and Total Fixed Cost are summed together and divided by the units of output per day. This figure is another important number to know because it can be added together with the Average Variable Cost to determine the cost per unit. In this case, it would be $49 ($22+$27). The formula for Average Total Cost is displayed below:
To find out Worker Productivity, we simply take the units of output per day and divide it by the number of workers. This will give us the number of units that each worker produces each day. This formula is shown below:
Both sets of calculations have the firm’s output price at $25 and the Average Variable Cost at $22. The difference is in the Average Total Cost. The first scenario has ATC at $27, while the second scenario has an ATC of $37. However, in both of these cases, the AVC is lower that the output price. Because of this, the firm should not be shut down immediately in either case.
In terms of break-even numbers, we need to divide the total loss by the daily wage of each worker. For the first example, the $400,000 loss would be divided by $80 per worker (400,000/80), which equals 5,000 workers. If 5,000 workers were laid off, it would leave a workforce of 45,000. If we assume that production remains steady at 200,000 units per day, this means that Worker Productivity would have to increase from 4 units per day to 4.4 units per day (200,000/45,000).
The second case would have a loss of $2,400,000 divided by $80 per worker (2,400,000/80), which would result in a loss of 30,000 workers, leaving the workforce at 20,000 workers. If we assume that production output (200,000 units) remains the same, then each worker would have to produce 10 units per
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For example, the competing organizations are more focusing on maximizing stakeholders’ wealth and consumers’ value. Merger and acquisition (M&A) is one of the popular trends in existing business environment. “Two companies of roughly equal size, polling their into a single business” is known as merger, and acquisition takes place “when one company acquires from another company either by controlling interest in the company’s stock, or business operation and its assets” (Coyle, 2000, p.2).
Some of the prominent e-commerce companies are able to do this and this is making them successful, and the one company which is in the top of the list is Amazon. Amazon.com offers services for three customer sets, consumer customers, seller customers and developer customers through retail websites.
The author is reliable and presents good knowledge of the topic. Although theories are conflicting with some other research this is the good scholarly source. This source contributed more than enough in research work and target audience of the source is financial institutions, professionals, students, and stockholders.
This paper discusses the concepts related to supply chain management and how businesses can gain from it. Any firm can not exist in isolation in terms of the flow of materials, information and cash. The supply chain includes a flow of materials and relevant information from the suppliers to manufacturers to the end customer on one hand and the flow of information and cash from the customer to manufacturer to the suppliers on the other hand.
An operating cycle of a company is the average period of time which a business takes for the acquisition of goods and the receipts of cash due to sale of these goods. The nature of the operating cycle depends on the type of business the company does. For example, if the business is a reseller then its operating cycle would not include any production time.
In most situations, the management strives to strike a balance between the level of debt and equity in its capital structure. Equity is usually generated by issuing shares in the stock market where the company is listed. Initially at the time of the inception of the company, the shares are floated for the first time in the stock market which is termed as the Initial Public Offering (IPO).
This game theory is of vitality in oligopolistic markets. In industrial economics, the profits of an industry or firm are highly dependent on not only how much it produces but also how much the other industry produces. This means that the payoffs of an industry for its production depend not only on their decisions but also on their rival’s decisions (Durlauf, 2010).
There are a variety of factors that may impact upon capital structure, such as taxation, bankruptcy, fundraising, as well as managerial decisions, which are all factors that could impact upon capital structure.
Modigliani and Miller (1958) were the pioneers in examining the