Answer to Question #297339 in Microeconomics for Maria

Question

A commercial company uses capital of 70 million UM., of which 50% represents the fixed capital and pays salaries of 25 million UM. The fixed capital is depreciated in 7 years. Production value is 70 million UM.

Determine the annual cost of production, the profit mass and the profit rate calculated on turnover.

Answer 1

$Annual Cost Of Production=Variable Capital+Salaries$

$Variable Capital=(70000000)-(\frac{50}{100}×70000000)$

$=35000000$

$Annual Cost=35000000+25000000=60000000$

Profit mass$=Production Value-AnnualCost$

$=70000000-60000000=10000000$

Profit Rate$=\frac{10000000}{60000000}×100=16.7$ %