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Fixed costs the demise of marginal q by Ricardo J. Caballero

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Published by Dept. of Economics, Massachusetts Institute of Technology in Cambridge, Mass .
Written in English

Book details:

Edition Notes

StatementRicardo J. Caballero, John V. Leahy
SeriesWorking paper / Dept. of Economics -- no. 96-14, Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 96-14.
ContributionsLeahy, John Vincent
The Physical Object
Pagination19 p. :
Number of Pages19
ID Numbers
Open LibraryOL24637184M

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  In a certain sense, some sunk costs begin as variable costs. Once a variable cost is incurred and cannot be recovered, however, it is necessarily fixed in . In The Economics of Inaction, leading economist Nancy Stokey shows how the tools of stochastic control can be applied to dynamic problems of decision making under uncertainty when fixed costs are present. Stokey provides a self-contained, rigorous, and clear treatment of two types of models, impulse and instantaneous by: The fixed costs currently allocated to the product line will be allocated to other product lines upon discontinuance. If a product line is discontinued, the contribution margin of the product line will indicate the net income increase or decrease. A product whose revenues do not cover the sum of its variable costs, its traceable fixed costs, and its allocated share of general corporate administrative expenses should usually be dropped. False In a decision to drop a segment, the opportunity cost of the space occupied by the segment is the cost of renting or building similar space nearby.

Question A publisher for a promising new novel figures fixed costs (overhead, advances, promotion, copy editing, typesetting) at $55,, and variable costs (printing, paper, binding, shipping) at $ for each book produced. If the book is sold to distibutors for $11 each, how many must be produced and sold for the publisher to break even. $ per page. Color ink with 24–40 pages. Color ink with 42– pages. Paperback specifications. UK marketplace (GBP) fixed cost. Additional per page cost. Black ink with 24– pages. £ per book. Black ink with – pages. £ per book. £ per . The degree of operating leverage is a cost accounting formula that shows how well you’re using your fixed costs to generate a profit. The more profit you can generate from the same amount of fixed cost, the higher your degree of operating leverage. Here’s the formula: Degree of operating leverage = contribution margin ÷ profit [ ]. The title-specific costs here are those that rise only as you sell books. You pay a shipping cost on a copy-by-copy basis - but the salaries of the personnel in fulfillment are fixed, and in doing the title p&l you shouldn’t include salaries as a charge because the shipping of this particular copy doesn’t increase anyone’s salary. The.