galla corporation makes a product with the following standard costs: standard quantity or hours standard price or rate standard cost per unit direct materials 8.2 pounds $7.00 per pound $57.40 direct labor 0.4 hours $20.00 per hour $8.00 variable overhead 0.4 hours $2.00 per hour $0.80 the company budgeted for production of 2,400 units in june, but actual production was 2,500 units. the company used 19,850 pounds of direct material and 980 direct labor-hours to produce this output. the company purchased 21,700 pounds of the direct material at $6.70 per pound. the actual direct labor rate was $19.20 per hour and the actual variable overhead rate was $1.80 per hour. the company applies variable overhead on the basis of direct labor-hours. the direct materials purchases variance is computed when the materials are purchased. the labor efficiency variance for june is:

1. consider a two-firm industry. firm 1 (the incumbent) chooses a level of output qı. firm 2 (the potential entrant) observes qı and then chooses its level of output q2. the demand for the product is p 100 q, where q is the total output sold by the two firms which equals qi +q2. assume that the marginal cost of each firm is zero. a) find the subgame perfect equilibrium levels of qi and q2 keeping in mind that firm 1 chooses qi first and firm 2 observes qi and chooses its q2. find the profits of the two firms-n1 and t2- in the subgame perfect equilibrium. how do these numbers differ from the cournot equilibrium? b) for what level of qi would firm 2 be deterred from entering? would a rational firm 1 have an incentive to choose this level of qi? which entry condition does this market have: blockaded, deterred, or accommodated? now suppose that firm 2 has to incur a fixed cost of entry, f> 0. c) for what values of f will entry be blockaded? d) find out the entry deterring level of q, denoted by q1', a expression for firm l's profit, when entry is deterred, as a function of f. for what values of f would firm 1 use an entry deterring strategy?