EFFECTIVE DECISION-MAKING 1202

| November 24, 2015

 

oseph Farms, Inc. is a small firm in the agricultural industry. They have asked you to help them complete the limited data they have gathered in an effort to enable effective decision-making. Some work can be done using MS Excel but it must be copied to an MS Word file for the final submission of this assignment. To assist Joseph Farms, Inc., respond to the following:

Using MS Excel or a table in MS Word, complete Table-1 (Joseph Farms, Inc., Cost and Revenue Data).
Assume that the price is $165.
Assume the fixed costs are $125, at an output level of 1.
Assume that the data represents a firm in pure competition.
Show your calculations.
Explain the MC=MR Rule. Describe the market structures to which this rule applies.
Create a chart to illustrate the data in Columns 9 and 10.
Describe the profit maximizing (or loss minimizing) output for this firm. Explain why or why not there an accounting profit?
Explain why a firm in pure competition is considered to be a “price taker.”

(Assignment continues below Table-1.)

Table-1: Joseph Farms, Inc., Cost and Revenue Data

Column 1


Column 2


Column 3


Column 4


Column 5


Column 6


Column 7


Column 8


Column 9


Column 10


Column 11

Output
Level


Price per unit


Total Fixed Cost


Total Variable Cost


Total Cost


Average Fixed Cost


Average Variable Cost


Average Total Cost


Marginal
Cost


Marginal Revenue


Total Revenue

0








$ -





NA










1








$ 113.00






















2








$ 213.00






















3








$ 300.00






















4








$ 375.00






















5








$ 463.00






















6








$ 563.00






















7








$ 675.00






















8








$ 813.00






















9








$ 975.00






















10








$ 1,163.00
























Using the data in Table-1 (Joseph Farms, Inc., Cost and Revenue Data), complete Table-2 (Joseph Farms, Inc., Revenue/Profit/Loss Data). Show your calculations in summary form.
Using the completed data in Table-2 (Joseph Farms, Inc., Revenue/Profit/Loss Data), Identify the break even output level for this firm.

Table-2: Joseph Farms, Inc., Revenue/Profit/Loss Data

Output
Level


Price


Total Revenue
Total Costs from Table 1

Profit or Loss

0











1











2











3











4











5











6











7











8











9











10




























oseph Farms, Inc. is a small firm in the agricultural industry. They have asked you to help them complete the limited data they have gathered in an effort to enable effective decision-making. Some work can be done using MS Excel but it must be copied to an MS Word file for the final submission of this assignment. To assist Joseph Farms, Inc., respond to the following:

Using MS Excel or a table in MS Word, complete Table-1 (Joseph Farms, Inc., Cost and Revenue Data).
Assume that the price is $165.
Assume the fixed costs are $125, at an output level of 1.
Assume that the data represents a firm in pure competition.
Show your calculations.
Explain the MC=MR Rule. Describe the market structures to which this rule applies.
Create a chart to illustrate the data in Columns 9 and 10.
Describe the profit maximizing (or loss minimizing) output for this firm. Explain why or why not there an accounting profit?
Explain why a firm in pure competition is considered to be a “price taker.”

(Assignment continues below Table-1.)

Table-1: Joseph Farms, Inc., Cost and Revenue Data

Column 1


Column 2


Column 3


Column 4


Column 5


Column 6


Column 7


Column 8


Column 9


Column 10


Column 11

Output
Level


Price per unit


Total Fixed Cost


Total Variable Cost


Total Cost


Average Fixed Cost


Average Variable Cost


Average Total Cost


Marginal
Cost


Marginal Revenue


Total Revenue

0








$ -





NA










1








$ 113.00






















2








$ 213.00






















3








$ 300.00






















4








$ 375.00






















5








$ 463.00






















6








$ 563.00






















7








$ 675.00






















8








$ 813.00






















9








$ 975.00






















10








$ 1,163.00
























Using the data in Table-1 (Joseph Farms, Inc., Cost and Revenue Data), complete Table-2 (Joseph Farms, Inc., Revenue/Profit/Loss Data). Show your calculations in summary form.
Using the completed data in Table-2 (Joseph Farms, Inc., Revenue/Profit/Loss Data), Identify the break even output level for this firm.

Table-2: Joseph Farms, Inc., Revenue/Profit/Loss Data

Output
Level


Price


Total Revenue
Total Costs from Table 1

Profit or Loss

0











1











2











3











4











5











6











7











8











9











10

 

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