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Find the value added for each company.

1. **Company A**
- Produces 20 fertilizer machines.
- Costs per machine: labor (wages) of 0.6 million and imported steel of 0.4 million.

2. **Sales by Company A**
- Sells 10 machines to Company B (a domestic fertilizer producer).
- Exports 5 machines to a foreign buyer at a price of 1.2 million per machine (including excise tax of 0.1 million per each of the 15 machines sold).

3. **Company B**
- Produces 10 tons of fertilizer using the machines, labor, and raw materials.
- Total payment to labor: 1 million.
- Raw materials used: worth 4 million, drawn from the company's existing stock.

4. **Government Revenue**
- Collects 1.5 million in income taxes from Company B employees.

5. **Sales by Company B**
- Sells all of the fertilizer (10 tons) to Company C for a total price of 4 million.
- Company C produces oranges using the fertilizer and labor.
- Total cost of labor: 0.8 million.

6. **Sales by Company C**
- Sells the oranges to a retailer (Company D) for 6 million.

7. **Company D's Revenue**
- Total proceeds from sale of oranges by its retail outlets: 13 million.
- Of these, 4 million is collected from government agencies and 9 million from private customers.
- In addition to 6 million paid to purchase oranges, Company D pays 1.5 million in labor costs.

8. **Retail Sector Workers**
- Receive government transfers worth 1.5 million.

9. **Foreign and Domestic Shareholders**
- Foreign shareholders of domestic companies (A, B, C, and D) earned 1 million.
- Domestic residents received 1 million from their ownership of shares in foreign countries.

Calculate the value added by each company in the above transactions.

Answer :

The value added for each company is 2 million, 35 million, 1.2 million, and 5.5 million, respectively.

How to solve

The value added by a company is the difference between the value of its output and the value of its inputs. In this case, the inputs are the labor, raw materials, and imported steel used to produce the fertilizer machineries, fertilizer, and oranges.

The outputs are the fertilizer machineries, fertilizer, and oranges themselves.

Let's calculate the value added for each company:

Company A: The value of the output is 15 * 1.2 million = 18 million. The value of the inputs is 0.6 million * 20 + 0.4 million * 20 = 16 million. Therefore, the value added by Company A is 18 million - 16 million = 2 million.

Company B: The value of the output is 10 ton * 4 million/ton = 40 million. The value of the inputs is 1 million + 4 million = 5 million. Therefore, the value added by Company B is 40 million - 5 million = 35 million.

Company C: The value of the output is 6 million. The value of the inputs is 4 million + 0.8 million = 4.8 million. Therefore, the value added by Company C is 6 million - 4.8 million = 1.2 million.

Company D: The value of the output is 13 million. The value of the inputs is 6 million + 1.5 million = 7.5 million. Therefore, the value added by Company D is 13 million - 7.5 million = 5.5 million.

Therefore, the value added for each company is 2 million, 35 million, 1.2 million, and 5.5 million, respectively.

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