International Gems sells fine jewelry and has implemented activity-based costing. Costs in the shipping department have been div

Answer:

a) This policy would be advantageous if the demand for sterile needles has elastic characteristics and the cross-price elasticity of demand linking drugs and sterile needles is high and

b) This policy would be unfavorable if the demand for sterile needles is characterized as inelastic while the cross-price elasticity between drugs and needles is high and

Explanation:

a) Under what conditions is this policy viewed as beneficial?

This policy is advantageous when the demand for sterile needles is elastic and the corresponding cross-price elasticity with drugs shows a positive and high relationship.

The elastic demand for sterile needles indicates that the quantity demanded increases more significantly in response to price changes.

The positive cross-price elasticity suggests that as the price of needles decreases, the demand for drugs decreases, assuming they are substitutes. Therefore, as the price of sterile needles approaches zero, the

b) Under what conditions is this policy seen negatively?

This policy turns unfavorable when the demand for sterile needles is inelastic and the cross-price elasticity relating drugs to needles is high and

An inelastic demand for sterile needles suggests the quantity demanded does not increase much with price reductions.

The share of the overall price attributed to the product is under 50%, likely around 35-40%.

Clarification:

Given that the product's standalone price is $450 while the service is priced at $550, the total cost when both are purchased separately comes to at least $1000. However, the company is currently offering a promotion, selling both for $800.

This indicates that the business is experiencing some loss that must be absorbed. The discount provided to clients results in a loss of $200, which acts as a motivation for the customers.

Explanation:

Part 1: True, the information given about the total costs incurred by the movie studio from last year shows that after the adjustments for the differences in totals

3rd movie cost - 2nd = 132-84 = 48 million

Thus, the variable costs must be at least $47 million but less than $255 million as well.

Part 2:  False, the marginal cost for producing the first movie was $45 million, while the studio produced three films during that period.

In conclusion, the variable costs for all three films last year were

45 x 3 = 135 million

The gain amounts to $370

Reasoning:

To determine the gain or loss for the date 12/31/2018, according to ABC's amortization schedule

On this date, the carrying value was $196,370 while ABC procured the bonds back for $196,000 on 12/31/2018

Now let’s compute the gain or loss using this formula

Gain/Loss = Carrying value - Bond stock

Substituting into the formula gives us Gain/Loss =$196,370-$196,000

Gain/Loss=$370

Therefore, on the date 12/31/2018, ABC will show a gain of $370