Suppose That the Fixed Costs for a Wheat Farm Are

question 17

Essay

Suppose that the fixed costs for a wheat farm are equal to $10, and variable costs are given in the chart:
$\begin{array}{cc} \underline {\mathrm{Y}=\text { wheat (mt) }}& \underline {\mathrm{TVC}(\$)}\\0 & 0 \\1 & 20 \\2 & 36 \\3 & 45 \\4 & 60 \\5 & 80 \\6 & 120\end{array}$ A. Explain what the fixed costs are for the wheat farm.
B. Explain what the variable costs are for the wheat farm.
C. Complete a chart that includes: Y, TC, TFC, TVC, ATC, AVC, and MC.
D. Are opportunity costs included in these costs?
E. Complete a graph of Y, TC, TFC, TVC, ATC, AVC, and MC.

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Definitions:

Vertical Analysis

A financial analysis method that compares line item amounts on a financial statement to a base figure to determine each item’s relative size or contribution to the whole.

Liquidity Test

A financial analysis conducted to determine a company's ability to pay off its short-term liabilities with its liquid assets.

Acid-Test Ratio

A financial measurement that evaluates a company's ability to pay off its current liabilities with its most liquid assets.

Accounts Receivable Turnover

A financial ratio indicating how many times a company's accounts receivable are collected during a specific period, typically a year.