Q: CVP; operating leverage; income statementRacine Tire Co. manufactures tires for all-terrain…
A: a. To calculate the break-even point in units, we need to divide the fixed costs by the contribution…
Q: Forest Company has five products in its Inventory. Information about ending inventory follows. Unit…
A: By comparing the product cost and market value, the inventory valuation approach known as the LCM…
Q: Mr. Ortega earns a monthly salary of $9,200. Based on Mr. Ortega's Form W-4, the tax tables require…
A: A payroll register is a document that lists every employee's pay information for a given time frame,…
Q: its in process, July 1, 70% complete 10,800 its completed and transferred out 88,000 Its in process,…
A: FIFO ( First-in, First-out ) inventory method.As the name implies, the first purchased items are…
Q: Jack and Jill are owners of UPAHill, an S Corporation. They own 25 and 75 percent, respectively.…
A: Taxable income at marginal rates is referred to as ordinary income. Some examples of ordinary income…
Q: Given the following Year 9 selected balance sheet data: Assets Cash on Hand Total Current Assets…
A: Ratio analysis is used in financial analysis to evaluate and interpret the financial performance of…
Q: REQUIRED: Record the abandonment entry assuming the abandonment does ot significantly affect the…
A: Lease-A lease is a contract in which the property/assets owners allow another party to use the…
Q: Surf Company can sell all of the two surfboard models it produces, but it has only 400 direct labor…
A: Lets understand the basics.When entity have scare input resource then management try to choose best…
Q: Jake's кoor Kepair has provided the following data concerning its costs: Wages and salaries Parts…
A: Activity Variance :— It is the difference between flexible budget and planning budget. Flexible…
Q: An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset…
A: Original cost of asset = $4,750,000Sale price of asset = $1,375,000Tax rate = 0.24 or 24%Asset sale…
Q: (b) Prepare cash flow statement that will show Mubin the movement of cash in his business.
A: In simple words, the cash flow statement shows inflow in and outflow from company during particular…
Q: Bernice sells her house to John on August 1 for $500,000, cash. The yearly real estate taxes (Jan. 1…
A: Federal income tax is a tax levied by the United States federal government on individuals,…
Q: None
A: Ending inventory is the amount of inventory that an entity has on hand, at the end of the period. It…
Q: ABC Company's budgeted sales for June, July, and August are 12,800, 16,800, and 14,800 units,…
A: Production budget is the statement which is prepared by the entity for the purpose of determining…
Q: Via Gelato, a popular neighborhood gelato shop, provided the following cost formulas and actual…
A: Variances is the amount of difference between the actual values and the values estimated by the…
Q: Chaz Corporation has taxable income in 2023 of $1,313,000 for purposes of computing the $179 expense…
A: To calculate the maximum total depreciation deduction for Chaz Corporation in 2023,we need to…
Q: [The following information applies to the questions displayed below.] Stoll Company's long-term…
A: Debt securities refer to the financial assets that are being repaid the principal amount to the…
Q: U&I are partners sharing profits in 3:2. They decided to change this proportion to 2:3 from the…
A: Adjustment Entry-An adjusting journal entry is a n entry in a company's general ledger that occurs…
Q: Reflector Glass Company prepared the following static budget for the year: Static Budget…
A: a. 9,750Explanation:Sales revenue = 8,500 x 3 per unit = 25,500 Total VC = 8,500 x 1.5 per unit =…
Q: Give me correct answer and explanation. Don't upload any image please.j
A: The objective of this question is to determine the number of payments and the time in months it will…
Q: On 1/1/yr 1 Wiley purchased $300,000 in 8% 5 year bonds when the effective interest rate was 10%.…
A: The objective of the question is to prepare journal entries for the bonds for year 1 and year 2 and…
Q: None
A: Return on common share equity:The return on common share equity is popularly known as the ROCE. It…
Q: S Following are costs for eight different items. Costs are shown for three different levels of units…
A: The objective of the question is to classify the given costs into variable, fixed, or mixed based on…
Q: Benson Memorial hospital cost formula for its wages and salaries is $2,030 per month plus $409 per…
A: The objective of the question is to calculate the planned budget for wages and salaries for the…
Q: Assume FICA tax rate of 6.2% on the first $132,900 in wages, plus 1.45% Medicare tax on all…
A: Net pay is the sum of money that an employee receives in hand. It is determined after subtracting…
Q: Packaging Solutions Corporation manufactures and sells a wide variety of packaging products.…
A: The variance is the difference between the standard and actual costs data. The spending variance is…
Q: In February 2024, Cullumber Corp, began the construction of a 10-storey building. The construction…
A: Notes:The notes in accounting are the legal document that represents the loan amount which is issued…
Q: Fowl paid the semiannual interest and issued the requisite number of shares for the bonds being…
A: A bond is an instrument that is a type of loan given by an investor to a borrower. It gives a fixed…
Q: Estimating Useful Life and Percent Used Up The property and equipment section of the lululemon…
A: Depreciable assets are assets used to make income or profit. Depreciable assets have a life of more…
Q: The auto repair shop of Quality Motor Company uses standards to control the labor time and labor…
A: Direct labor variance is the difference between standard direct labor cost for actual production and…
Q: Juda Recliners manufactures leather recliners and uses flexible budgeting and a standard cost…
A: Let's break down the computations step by step:1. Direct Materials Cost Variance: - Actual Cost…
Q: Suppose McDonald's 2025 financial statements contain the following selected data (in millions).…
A: RATIO ANALYSISRatio analysis is the process of determining and interpreting numerical relationships…
Q: Give me correct answer and explanation.s
A: The objective of the question is to determine which of the three quantitative methods - a…
Q: The following transactions apply to Ozark Sales for Year 1: 1. The business was started when the…
A: Financial Statements include Income Statement, Statement of Stockholder's Equity, Balance Sheet and…
Q: Assume that a company makes three products-Product A, Product B, and Product C-and provides the…
A: The contribution margin refers to the difference between the sales and the variable expense. The…
Q: Each shade requires a total of $45.00 in direct materials that includes 4 adjustable poles that cost…
A: Budget is termed as estimation of revenue and expenses that can happen in a future. In a simple…
Q: Business Solutions's second-quarter 2022 fixed budget performance report for its computer furniture…
A: A flexible budget can adapt to changes in any situation such as sales or production volume or any…
Q: Consider the following data: x -7 -6 -5 -4 -3 P(X = x) 0.2 0.1 0.2 0.1 0.4 Step 1 of 5: Find the…
A: The objective of the question is to calculate the expected value of a random variable X. The…
Q: Roberds Tech is a for-profit vocational school. The school bases its budgets on two measures of…
A: Flexible budget The flexible budget is prepared to estimate the difference between the actual and…
Q: The account balances for the non-cash current assets and current liabilities of Kid-game Software…
A: Cash Flows Statements Is One Of The Major Financial Statements It Shows The Cash Inflows And…
Q: None
A: The uncollectible receivables are those accounts receivable that the company estimates will not be…
Q: Gassy Stores sells $400,000 of 12% bonds on June 1, 2022. The bonds pay interest on December 1 and…
A: Bonds are generally issued for a longer period of time which exceeds one year and thus, are…
Q: what would be the difference in gross margin between fifo and lifo cost flow assumptions
A: The difference in gross margin between FIFO (First-In, First-Out) and LIFO (Last-In, First-Out) cost…
Q: per Month Revenue Job $ 279 rixea variable Component Component per Actual Total for February $…
A: Flexible budget performance report is a management report that compares actual results with budgeted…
Q: None
A: Flexible Budget for variable cost is calculated by multiplying budgeted variable cost per activity…
Q: Exercise 18-8 (Algo) Computing missing amounts in contribution margin income statements LO A1…
A: Income statement is a financial statement that shows profitability, total revenue and total…
Q: 14. Given the following date, calculate the open to buy. Sales: Reductions: Ending Inventory: Markup…
A: Open to buyThe strategy used for inventory management in the company is to estimate the units or…
Q: Walte Company just starting business had the following transactions in May: Purchase June 1 Sale…
A: Periodic Inventory :- periodic inventory system is a mechanism for mesuring cost of goods sold and…
Q: Required Information The Foundational 15 (Algo) [LO11-2, LO11-3, LO11-4, LO11-5, LO11-6] [The…
A: Financial Advantage : Financial advantage means the benefit a company will get if company chooses a…
Q: lucation.com/ext/map/index.html?_con-con&external_browser=0&launch Url=https%253A%252F% Saved…
A: BALANCE SHEETThe balance sheet is one of the important financial statements of the company. Balance…
Step by step
Solved in 5 steps
- Mallette Manufacturing, Inc., produces washing machines, dryers, and dishwashers. Because of increasing competition, Mallette is considering investing in an automated manufacturing system. Since competition is most keen for dishwashers, the production process for this line has been selected for initial evaluation. The automated system for the dishwasher line would replace an existing system (purchased one year ago for 6 million). Although the existing system will be fully depreciated in nine years, it is expected to last another 10 years. The automated system would also have a useful life of 10 years. The existing system is capable of producing 100,000 dishwashers per year. Sales and production data using the existing system are provided by the Accounting Department: All cash expenses with the exception of depreciation, which is 6 per unit. The existing equipment is being depreciated using straight-line with no salvage value considered. The automated system will cost 34 million to purchase, plus an estimated 20 million in software and implementation. (Assume that all investment outlays occur at the beginning of the first year.) If the automated equipment is purchased, the old equipment can be sold for 3 million. The automated system will require fewer parts for production and will produce with less waste. Because of this, the direct material cost per unit will be reduced by 25 percent. Automation will also require fewer support activities, and as a consequence, volume-related overhead will be reduced by 4 per unit and direct fixed overhead (other than depreciation) by 17 per unit. Direct labor is reduced by 60 percent. Assume, for simplicity, that the new investment will be depreciated on a pure straight-line basis for tax purposes with no salvage value. Ignore the half-life convention. The firms cost of capital is 12 percent, but management chooses to use 20 percent as the required rate of return for evaluation of investments. The combined federal and state tax rate is 40 percent. Required: 1. Compute the net present value for the old system and the automated system. Which system would the company choose? 2. Repeat the net present value analysis of Requirement 1, using 12 percent as the discount rate. 3. Upon seeing the projected sales for the old system, the marketing manager commented: Sales of 100,000 units per year cannot be maintained in the current competitive environment for more than one year unless we buy the automated system. The automated system will allow us to compete on the basis of quality and lead time. If we keep the old system, our sales will drop by 10,000 units per year. Repeat the net present value analysis, using this new information and a 12 percent discount rate. 4. An industrial engineer for Mallette noticed that salvage value for the automated equipment had not been included in the analysis. He estimated that the equipment could be sold for 4 million at the end of 10 years. He also estimated that the equipment of the old system would have no salvage value at the end of 10 years. Repeat the net present value analysis using this information, the information in Requirement 3, and a 12 percent discount rate. 5. Given the outcomes of the previous four requirements, comment on the importance of providing accurate inputs for assessing investments in automated manufacturing systems.At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $67,000 per year, to ease the problem. Using the extra worker, the company will be able to produce and sell 9,000 more units per year. The selling price per unit is $20. The cost per unit currently is $15.85 as shown: What is the annual financial impact of hiring the extra worker for the bottleneck process?Jonfran Company manufactures three different models of paper shredders including the waste container, which serves as the base. While the shredder heads are different for all three models, the waste container is the same. The number of waste containers that Jonfran will need during the following years is estimated as follows: The equipment used to manufacture the waste container must be replaced because it is broken and cannot be repaired. The new equipment would have a purchase price of 945,000 with terms of 2/10, n/30; the companys policy is to take all purchase discounts. The freight on the equipment would be 11,000, and installation costs would total 22,900. The equipment would be purchased in December 20x4 and placed into service on January 1, 20x5. It would have a five-year economic life and would be treated as three-year property under MACRS. This equipment is expected to have a salvage value of 12,000 at the end of its economic life in 20x9. The new equipment would be more efficient than the old equipment, resulting in a 25 percent reduction in both direct materials and variable overhead. The savings in direct materials would result in an additional one-time decrease in working capital requirements of 2,500, resulting from a reduction in direct material inventories. This working capital reduction would be recognized at the time of equipment acquisition. The old equipment is fully depreciated and is not included in the fixed overhead. The old equipment from the plant can be sold for a salvage amount of 1,500. Rather than replace the equipment, one of Jonfrans production managers has suggested that the waste containers be purchased. One supplier has quoted a price of 27 per container. This price is 8 less than Jonfrans current manufacturing cost, which is as follows: Jonfran uses a plantwide fixed overhead rate in its operations. If the waste containers are purchased outside, the salary and benefits of one supervisor, included in fixed overhead at 45,000, would be eliminated. There would be no other changes in the other cash and noncash items included in fixed overhead except depreciation on the new equipment. Jonfran is subject to a 40 percent tax rate. Management assumes that all cash flows occur at the end of the year and uses a 12 percent after-tax discount rate. Required: 1. Prepare a schedule of cash flows for the make alternative. Calculate the NPV of the make alternative. 2. Prepare a schedule of cash flows for the buy alternative. Calculate the NPV of the buy alternative. 3. Which should Jonfran domake or buy the containers? What qualitative factors should be considered? (CMA adapted)
- Shelby Industries has a capacity to produce 45.000 oak shelves per year and is currently selling 40,000 shelves for $32 each. Martin Hardwoods has approached Shelby about buying 1,200 shelves for a new project and is willing to pay $26 each. The shelves can be packaged in bulk; this saves Shelby $1.50 per shelf compared to the normal packaging cost. Shelves have a unit variable cost of $27 with fixed costs of $350,000. Because the shelves dont require packaging, the unit variable costs for the special order will drop from $27 per shelf to $25.50 per shelf. Shelby has enough idle capacity to accept the contract. What is the minimum price per shelf that Shelby should accept for this special order?Nico Parts, Inc., produces electronic products with short life cycles (of less than two years). Development has to be rapid, and the profitability of the products is tied strongly to the ability to find designs that will keep production and logistics costs low. Recently, management has also decided that post-purchase costs are important in design decisions. Last month, a proposal for a new product was presented to management. The total market was projected at 200,000 units (for the two-year period). The proposed selling price was 130 per unit. At this price, market share was expected to be 25 percent. The manufacturing and logistics costs were estimated to be 120 per unit. Upon reviewing the projected figures, Brian Metcalf, president of Nico, called in his chief design engineer, Mark Williams, and his marketing manager, Cathy McCourt. The following conversation was recorded: BRIAN: Mark, as you know, we agreed that a profit of 15 per unit is needed for this new product. Also, as I look at the projected market share, 25 percent isnt acceptable. Total profits need to be increased. Cathy, what suggestions do you have? CATHY: Simple. Decrease the selling price to 125 and we expand our market share to 35 percent. To increase total profits, however, we need some cost reductions as well. BRIAN: Youre right. However, keep in mind that I do not want to earn a profit that is less than 15 per unit. MARK: Does that 15 per unit factor in preproduction costs? You know we have already spent 100,000 on developing this product. To lower costs will require more expenditure on development. BRIAN: Good point. No, the projected cost of 120 does not include the 100,000 we have already spent. I do want a design that will provide a 15-per-unit profit, including consideration of preproduction costs. CATHY: I might mention that post-purchase costs are important as well. The current design will impose about 10 per unit for using, maintaining, and disposing our product. Thats about the same as our competitors. If we can reduce that cost to about 5 per unit by designing a better product, we could probably capture about 50 percent of the market. I have just completed a marketing survey at Marks request and have found out that the current design has two features not valued by potential customers. These two features have a projected cost of 6 per unit. However, the price consumers are willing to pay for the product is the same with or without the features. Required: 1. Calculate the target cost associated with the initial 25 percent market share. Does the initial design meet this target? Now calculate the total life-cycle profit that the current (initial) design offers (including preproduction costs). 2. Assume that the two features that are apparently not valued by consumers will be eliminated. Also assume that the selling price is lowered to 125. a. Calculate the target cost for the 125 price and 35 percent market share. b. How much more cost reduction is needed? c. What are the total life-cycle profits now projected for the new product? d. Describe the three general approaches that Nico can take to reduce the projected cost to this new target. Of the three approaches, which is likely to produce the most reduction? 3. Suppose that the Engineering Department has two new designs: Design A and Design B. Both designs eliminate the two nonvalued features. Both designs also reduce production and logistics costs by an additional 8 per unit. Design A, however, leaves post-purchase costs at 10 per unit, while Design B reduces post-purchase costs to 4 per unit. Developing and testing Design A costs an additional 150,000, while Design B costs an additional 300,000. Assuming a price of 125, calculate the total life-cycle profits under each design. Which would you choose? Explain. What if the design you chose cost an additional 500,000 instead of 150,000 or 300,000? Would this have changed your decision? 4. Refer to Requirement 3. For every extra dollar spent on preproduction activities, how much benefit was generated? What does this say about the importance of knowing the linkages between preproduction activities and later activities?Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy's paid $160,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $875,000 per year. The fixed costs associated with this will be $220,000 per year, and variable costs will amount to 24 percent of sales. The equipment necessary for production of the Potato Pet will cost $930,000 and will be depreciated in a straight-line manner for the four years of the product life (as with all fads, it is felt the sales will end quickly). This is the only initial cost for the production. Pappy's has a tax rate of 23 percent and a required return of 16 percent. a. Calculate the payback period for this project. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. Calculate the NPV for this project. Note: Do not round intermediate calculations and round your answer to 2 decimal…
- Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy's paid $170,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $885,000 per year. The fixed costs associated with this will be $224,000 per year, and variable costs will amount to 20 percent of sales. The equipment necessary for production of the Potato Pet will cost $950,000 and will be depreciated in a straight-line manner for the four years of the product life (as with all fads, it is felt the sales will end quickly). This is the only initial cost for the production. Pappy's has a tax rate of 25 percent and a required return of 14 percent. a. Calculate the payback period for this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Calculate the NPV for this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,…Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $180,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $895,000 per year. The fixed costs associated with this will be $228,000 per year, and variable costs will amount to 24 percent of sales. The equipment necessary for production of the Potato Pet will cost $970,000 and will be depreciated in a straight-line manner for the four years of the product life (as with all fads, it is felt the sales will end quickly). This is the only initial cost for the production. Pappy's has a tax rate of 22 percent and a required return of 16 percent. Calculate the Time 0 cash flow for this project. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. Calculate the annual OCF for this project. Note: Do not round…Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy's paid $195,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $910,000 per year. The fixed costs associated with this will be $234,000 per year, and variable costs will amount to 22 percent of sales. The equipment necessary for production of the Potato Pet will cost $1,000,000 and will be depreciated in a straight-line manner for the four years of the product life (as with all fads, it is felt the sales will end quickly). This is the only initial cost for the production. Pappy's has a tax rate of 25 percent and a required return of 15 percent. a. Calculate the payback period for this project. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. Calculate the NPV for this project. Note: Do not round intermediate calculations and round your answer to 2 decimal…
- Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $121,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $576,000 per year. The fixed costs associated with this will be $180,000 per year, and variable costs will amount to 21 percent of sales. The equipment necessary for production of the Potato Pet will cost $622,000 and will be depreciated in a straight-line manner for the four years of the product life (as with all fads, it is felt the sales will end quickly). This is the only initial cost for the production. Pappy's has a tax rate of 35 percent and a required return of 14 percent. Calculate the payback period for this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Calculate the NPV for this project. (Do not round intermediate calculations and round your answer to 2 decimal places,…Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $175,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $890,000 per year. The fixed costs associated with this will be $226,000 per year, and variable costs will amount to 22 percent of sales. The equipment necessary for production of the Potato Pet will cost $960,000 and will be depreciated in a straight-line manner for the four years of the product life (as with all fads, it is felt the sales will end quickly). This is the only initial cost for the production. Pappy's has a tax rate of 21 percent and a required return of 15 percent. Calculate the payback period for this project. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Calculate the NPV for this project. Note: Do not round intermediate calculations and round your answer to 2 decimal…Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $220,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $935,000 per year. The fixed costs associated with this will be $244,000 per year, and variable costs will amount to 24 percent of sales. The equipment necessary for production of the Potato Pet will cost $950,000 and will be depreciated in a straight-line manner for the four years of the product life (as with all fads, it is felt the sales will end quickly). This is the only initial cost for the production. Pappy's has a tax rate of 25 percent and a required return of 16 percent. a. Calculate the payback period for this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Calculate the NPV for this project. (Do not round intermediate calculations and round your answer to 2 decimal…