Assignment 2: LASA 1: The Costs of Production

Joseph Farms, Inc. is a small firm in the agricultural industry. They have asked you to help them complete the limited data they have gathered in an effort to enable effective decision-making. Some work can be done using MS Excel but it must be copied to an MS Word file for the final submission of this assignment. To assist Joseph Farms, Inc., respond to the following:

• Using MS Excel or a table in MS Word, complete Table-1 (Joseph Farms, Inc., Cost and Revenue Data).
  • Assume that the price is $165.
  • Assume the fixed costs are $125, at an output level of 1.
  • Assume that the data represents a firm in pure competition.
  • Show your calculations.
• Explain the MC=MR Rule.  Describe the market structures to which this rule applies.
• Create a chart to illustrate the data in Columns 9 and 10.
• Describe the profit maximizing (or loss minimizing) output for this firm.  Explain why or why not there an accounting profit?
• Explain why a firm in pure competition is considered to be a “price taker.”

 (Assignment continues below Table-1.)

Table-1:  Joseph Farms, Inc., Cost and Revenue Data

Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7		Column 8	Column 9	Column 10	Column 11
Output Level	Price per unit	Total Fixed Cost	Total Variable Cost	Total Cost	Average Fixed Cost	Average Variable Cost		Average Total Cost	Marginal Cost	Marginal Revenue	Total Revenue
0			$             –		NA
1			$    113.00
2			$    213.00
3			$    300.00
4			$    375.00
5			$    463.00
6			$    563.00
7			$    675.00
8			$    813.00
9			$    975.00
10			$ 1,163.00

 

• Using the data in Table-1 (Joseph Farms, Inc., Cost and Revenue Data), complete Table-2 (Joseph Farms, Inc., Revenue/Profit/Loss Data). Show your calculations in summary form.
• Using the completed data in Table-2 (Joseph Farms, Inc., Revenue/Profit/Loss Data), Identify the break even output level for this firm.

Table-2: Joseph Farms, Inc., Revenue/Profit/Loss Data

Output Level	Price	Total Revenue	Total Costs from Table 1	Profit or Loss
0
1
2
3
4
5
6
7
8
9
10

 

 

 

 

 

 

 

 

Save your MS Word file including your graphs or charts using the filename LastnameFirstInitial_M3A2 and submit it to the M3: Assignment 2 Dropbox by Wednesday, September 24, 2014.

Remember, quotations, paraphrases, and ideas you get from books, articles, or other sources of information should be cited using APA style. Help with citing sources can be found through the Academic Resources page under Course Home.

 

Assignment 2 Grading Criteria	Maximum Points
Accurately calculated cost data (total fixed, total, average fixed, average variable, average total, and marginal) and revenue data (marginal and total) for output level ranging from 1 to 10 in Table-1.  Showed calculations in summary form. Correctly assumed data represented a firm in pure competition. (40 points) Completed Table-1 as Microsoft Excel spreadsheet or Word table. (8 points)	48
Explained the MC=MR Rule. (12 points) Identified market structures the MC=MR Rule applies to.  (8 points) Explained why MC=MR Rule applies to these market structures.  (12 points)	32
Graphed all the data in column 9 of Table-1 (marginal cost) as curves in Microsoft Excel. (8 points) Graphed all the data in column 10 of Table-1 (marginal revenue) as curves in Microsoft Excel. (8 points)	16
Explained the profit maximizing (or loss minimizing) output for Joseph’s Farms, Inc. (14 points) Explained whether or not there is an economic profit for Joseph’s Farms, Inc. (14 points)	28
Explained why a firm in pure competition is considered to be a “price taker.”	28
Accurately calculated price, total revenue, and profit or loss data for output level ranging from 0 to 10 in Table-2 using data from Table-1. Showed calculations. (10 points) Completed Table-2 as Microsoft Excel spreadsheet or Word table. (2 points)	12
Accurately calculated the break-even output level (break-even point) for Joseph’s Farms, Inc. using data in Table-2.  Showed calculations.	16
Style (4 points): Tone, audience, and word choice. Usage and Mechanics (4 points): Grammar, spelling, and sentence structure. APA Elements (12 points): In text citations and references, paraphrasing, and appropriate use of quotations and other elements of style.	20
Total:	200

 

 

Create your own unique While-End  repetition structure. You decide the theme. You should provide both the pseudocode and the flowchart of your example. Be sure to provide an overview of what your repetition structure is doing.Please keep the design simple for this exercise.

Assignment 2: Capital Budgeting

Futronics Inc. is a $2 billion firm that sells communications services. Founded in 1937, Futronics has provided consumer products, as well as government systems and services, for well over half a century. Due to a sharp increase in competition, flattened sales, and external economic conditions, Futronics is implementing a corporate overhead reduction program. The proposal is to replace the company’s central office stores with outside vendors. The investment will cost $1,000,000 and yield incremental cash flows of $450,000 in year one (1), $350,000 in year two (2), $300,000 in year three (3), and $250,000 in year four (4). There is no salvage value of the asset, and the firm has a cost of capital of 8%.

Write a two to three (2-3) page paper in which you:

1. Calculate the net present value, internal rate of return, and simple payback. Next, determine the effect that each of the three (3) values will have on the company.

2. Explain one to two (1-2) investment gains that the company could achieve by outsourcing the central office functions. Focus on the company’s potential to reduce overhead and still maintain or even improve the quality of its products.

3. Discuss one (1) capital budgeting method that would be most effective for the company. Next, discuss one (1) capital budgeting method that would have the least value for the company as compared to others. Provide a rationale for your response.

4. Use at least one (1) quality reference. Note: Wikipedia and similar Websites do not qualify as academic resources.

 

Your assignment must follow these formatting requirements:

• Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.

• Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

 

The specific course learning outcomes associated with this assignment are:

• Describe the characteristics and valuation of stocks and bonds, and how each is a key component in the financing of corporations.

• Describe the risk versus return trade-off and identify the techniques used to measure risk.

• Explain the capital budgeting process, how project cash flow is determined and valued, and how project risk influences decision making.

• Use technology and information resources to research issues in finance.

• Write clearly and concisely about finance using proper writing mechanics.

 

 

The assignment is 5-7 pages, with APA format, and 3 sources. I have attatched reading material to complete the assignment which should be done by Sat 4:00pm