The International Company Makes and Sells Only One Product

question 60

Multiple Choice

The International Company makes and sells only one product. There are 2 divisions, one in France and one in Newcastle.
The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available:
French Division Cost Structure


Newcastle Division Cost Structure

-All of these expenses (except depreciation) are paid in cash in the month they are incurred. If the Newcastle Division budgeted to sell an additional 2,000 units in July (27,000 in total) , then the total budgeted selling and administrative expenses per unit sold for July is

• A)£5.65.
• B)£5.28.
• C)£5.23.
• D)£5.62.

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Definitions:

Externalities

External benefits and external costs.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning individuals cannot be effectively excluded from use, and where use by one individual does not reduce availability to others.

Consumer Surplus

The difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually pay.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual price they receive.