In Problem 1, If the Demand Schedule for Bong's Book

question 22

Multiple Choice

In Problem 1, if the demand schedule for Bong's book is Q = 3,000 - 100p, the cost of having the book typeset is $10,000, and the marginal cost of printing an extra book is $4, then he would maximize his profits by

• A) having it typeset and selling 1,300 copies.
• B) having it typeset and selling 1,500 copies.
• C) having it typeset and selling 2,600 copies.
• D) not having it typeset and not selling any copies.
• E) having it typeset and selling 650 copies.

Analyze and calculate gains or losses on the disposal of property, plant, and equipment.

Perform and understand the calculations for depletion and its impact on financial statements.

Recognize the implications of property, plant, and equipment on financial ratios, specifically total asset turnover.

Apply the cost principle in the acquisition of property, plant, and equipment, including lump-sum purchases.

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Definitions:

Flotation Costs

Expenses incurred by a company in issuing new securities, including fees to underwriters, lawyers, and accountants.

Administrative Fees

Charges that cover the operational costs of managing investments or conducting transactions.

WACC

Weighted Average Cost of Capital; a calculation of a firm’s cost of capital where each category of capital is proportionately weighted.

Market Values

The present rate at which a service or asset is available for purchase or sale on the market.