After Analysing Factor Input Data, a Firm as Established That

question 39

Essay

After analysing factor input data, a firm as established that:
$\begin{array}{|l|l|}\hline \text { A change in one hour of labour } & \text { Would change output by } 100 \text { units a day } \\\hline \text { A change in one hour of capital } & \text { Would change output by } 20 \text { units a day } \\\hline \text { Labour costs per hour } & \text { R50 } \\\hline \text { Capital costs per hour } & \text { R5 } \\\hline\end{array}$ Can the firm increase its production without increasing its budget?

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Definitions:

Contribution Margin Ratio

The percentage of each sales dollar that remains after variable costs have been deducted, indicating how much contributes towards fixed costs and profit.

Break-even Point

The Break-even Point is the level of production or sales at which the total revenue generated equals the total costs, indicating no profit or loss.

Target Profit

The specific amount of net income that a company aims to achieve within a certain time frame.

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and overhead) in the cost of a product.