Mary Magnolia Has Variable Costs Equal to Y²/F, Where

question 20

Multiple Choice

Mary Magnolia has variable costs equal to y²/F, where y is the number of bouquets she sells per month and where F is the number of square feet of space in her shop.If Mary has signed a lease for a shop with 1,000 square feet, if she is not able to get out of the lease or to expand her store in the short run, and if the price of a bouquet is $3 per unit, how many bouquets per month should she sell in the short run?

• A)1,500
• B)500
• C)2,250
• D)1,000
• E)1,650

Identify and compute product cost per unit under both costing methods.

Analyze the impact of inventory levels on net income under both costing methods.

Understand and calculate the contribution margin and its significance.

Analyze the financial implications of production and sales volume differences on net income.

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Definitions:

Tolerance Range

The boundaries a manager sets in determining the acceptable quality of a product.

Dispatching

The process of sending off goods or services to their intended destinations or assigning tasks to individuals.

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A business entity that provides transportation services to passengers via vehicles, such as cars or vans, often on a metered fare basis.

Total Quality Management

A management approach focused on continuous improvement of processes, products, and services to enhance customer satisfaction.