Consider the market for elbow surgeries where no one in the market has insured. Demand is represented by Qd = 500 − P, and supply is Qs = P + 100 where P is price and Q is the
number of elbow surgeries. :
1. Find the market equilibrium when no one in the market has insurance. [5]
2. Suppose everyone enrolls in an insurance program where there is a coinsurance rate of 45
 

(a) Sketch the supply curve, the demand curve without insurance, and the demand curve
with insurance on a single graph.
(b) Find the new market equilibrium.

Provide the journal entry that would record the allocation of underapplied or overapplied among Work- in-Process, finished goods, and cost of goods sold. Manufacturing overhead for the month was overapplied by $3,000. The company allocates any underapplied or overapplied overhead among Work-in-Process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. Required: Townley Inc. has provided the following data for the month of February. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month. Work-in- Finish Process ed Cost of Total Goods Goods Sold Direct materials $7,570 $19,20 $35,280 $62,05 0 8,810 24,000 44,100 76,910 Direct labor Manufacturing overhead applied Total 8.320 15.60 28.080 52.00 $24,700 $58,80 $107,460 $190,9 0 60