Manufacturing: Sales revenue = Pm • Qm = 150 Payments to labor = W • Lm = 100 Payments to capital = Rk • K = 50 Agriculture: Sales revenue = Pa • Qa = 150  Payments to labor

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 13EA: Company A has current sales of $10,000,000 and a 45% contribution margin. Its fixed costs are...
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Manufacturing:

Sales revenue = Pm • Qm = 150

Payments to labor = W • Lm = 100

Payments to capital = Rk • K = 50

Agriculture:

Sales revenue = Pa • Qa = 150 

Payments to labor = W • La = 50

Payments to land = Rt • T = 100

Suppose an increase in the price of agriculture is 10% and the increase in the wage is 5%, the price of manufacturing were to fall by 10%, would landowners or capital owners be better off? Explain. How would the decrease in the price of manufacturing affect labor? Explain.

 

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