A pencil manufacturer is in a perfectly competitive market. The firm can sell as much as it wants at a price of $1.50 per pencil. At some production levels, its average variable costs are less than $1.50, but there is no production level where its average total cost is equal or less than $1.50. What would be your recommendation to the pencil manufacturer? a. Increase production to decrease fixed costs per unit. b. Exit the business immediately. c. Continue production both in the short run and in the long run. d. Continue production in the short run, but exit the business in the long run unless prices are expected to rise or costs to fall..

Due to rapid employee turnover in the accounting department, the following transactions involving intangible assets were improperly recorded by bridgeport corporation. 1. bridgeport developed a new manufacturing process, incurring research and development costs of $195,600. the company also purchased a patent for $45,200. in early january, bridgeport capitalized $240,800 as the cost of the patents. patent amortization expense of $12,040 was recorded based on a 20-year useful life. 2. on july 1, 2017, bridgeport purchased a small company and as a result recorded goodwill of $52,000. bridgeport recorded a half-year’s amortization in 2017, based on a 20-year life ($1,300 amortization). the goodwill has an indefinite life. prepare all journal entries necessary to correct any errors made during 2017. assume the books have not yet been closed for 2017.