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Essay Available:
Pages:
1 page/≈275 words
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2 Sources
Style:
APA
Subject:
Mathematics & Economics
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
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$ 4.32
Topic:

Pay Rate Increase of Walmart and Apple's Contract with Glass Supplier

Essay Instructions:

ANSWER THE QUESTIONS(PLEASE SEPARATE THE ANSWERS).
1. In February 2015, Wal-Mart announced that it would increase the pay rate for all its lowest paid workers. Is this wage increase a growth in fixed costs or variable costs? Would it be affected by output? If Wal-Mart's sales drop off, how might the store adjust its labor costs?
2.In fall 2013, Apple loaned its sapphire glass supplier $578 million to set up a manufacturing plant to produce the glass for the new iPhone 6. In November 2014, Apple's glass supplier lost the contract and promptly filed for bankruptcy. What happened to cause bankruptcy? How did the loss of the Apple contract affect fixed cost for the glass supplier? How might this have affected Average Total Cost (ATC)? Compare this situation to economies of scale?

Essay Sample Content Preview:
Economics
Student's Name
Institutional Affiliation
Economics
1 Walmart
Fixed costs are those costs that do not vary output and include insurance, rent, set-up costs, and depreciation costs while variable costs are those that do vary with output. Variable costs are also referred to as direct costs; they include raw materials and labor costs. If there is an increase in one of the variable costs, the total variable increases, therefore, the decision of increasing the pay rate of the lowest paid workers in Walmart was as a result of an increase in the variable costs. Variable costs vary with output, a decrease in variable costs results in a decrease of the output, and an increase in VC results in an increase (Kaplan & Atkinson, 2015). Therefore, an increase in the pay rate was affected by the output. Salaries are the biggest worries for companies because they are difficult to control. Reducing the salaries can be touchy to the affected employees hence it is important to deal with it with truth, compassion and firmness. The organization can use the following ways:
* Reviewing compensation- it should review its pay schedules and ensure that they are in line with the trends within the organization. It should also have a frank talk with the employees and prepare them for salary adjustment.
* Share jobs- full-time employees should be replaced with part-time empl...
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