Alvarado company sells a machine for $8,050 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. with sales being made evenly throughout the year, the company sells 540 machines in 2014, its first year of operation (warranty costs are incurred half in 2014 and half in 2015). as a result of product testing, the company estimates that the warranty cost is $395 per machine ($172 parts and $223 labor).

assuming that actual warranty costs are incurred exactly as estimated, what is the balance in the warranty liability account at december 31, 2014?

German brothels recently began offering a monthly subscription service for multiple purchasers. if you thought that the brothels' encouragement of prostitution was immoral to begin with, would you consider this pricing plan to be even more immoral? suppose a particular patron at a german brothel has the following willingness-to-pay schedule for services at the brothel, per session. session willingness to pay 1st $84 2nd $72 3rd $60 4th $48 5th $36 6th $24 suppose this consumer would not demand any more sessions, even for free. also assume that the marginal cost to the brothel, per session, is constant at $12. at a price of $78.00 per session, the number of sessions demanded by this consumer would be . at this price and quantity, consumer surplus is $ and producer surplus is $ . suppose the brothel has devised a new pricing scheme for consumers who demand more than 1 session. this pricing scheme is a subscription service, whereby consumers can pay a flat fee of $259.20 and can have up to 6 sessions total. using this subscription pricing model, this consumer would demand sessions. under this scenario, consumer surplus is $ and producer surplus is $ . (hint: for consumer surplus, consider how much total value the consumer places on all sessions, versus the total price paid.)