please show in excel with steps Problem 1:An operation is evaluating the acquisition of new machinery. Three alternatives has been identified:AlternativeABCFixed Annual Cost$100,000$200,000$150,000-Determine break-even quantity for each alternativeVariable Costs$20$5$7.50Determine the ranges of production (units per year) over which each alternative will berecommended (The production capacity is 30,000 units per year)

Part 2: Approach to solving the question1. Calculate Break-even Quantity: To calculate the…

Answered: Problem 1: An operation is evaluating…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Instructions An evaluation is needed for a sock production project that requires an initial investment of $50,000,000°, of which 80% corresponds to depreciable fixed assets, and 20% to working capital. The unit production cost is $10,000°°, and a unit sale value of $13,500°° is estimated. The market study revealed a potential demand of 20,000 units for the first year. The fixed assets are depreciated straight-line over a useful life of 10 years. Operational expenses are estimated at $4,000,000° for the first year. The fixed costs amount to $10,000,000° for the first year. The following increments are estimated: sales increase by 2% annually, variable unit cost by 3% annually, unit sale price by 3% annually, operational expenses by 6% annually, and fixed costs by 5% annually. The project has a useful life of 5 years. 1. Build the project's cash flow. 2. Calculate the Internal Rate of Return (IRR) and determine if the project is profitable or not, considering an opportunity rate of…
Question: A piece of machinery has a cost basis of $45,000. Its salvage value will be $5000 after 10,000 hours of operation. With units-of-production depreciation, what is the allowable depreciation rate per hour? What is the book value after 4,000 hours of operation? Suggestion: Use straight-line on an hourly basis for the rate. Use that rate to determine the BV @ 4,000 hours.
QUESTION ONEETM Co is considering investing in machinery costing K150,000 payable at the start of firstyear. The new machine will have a three-year life with K60,000 salvage value at the end of 3 years. Other details relating to the project are as follows.Year 1 2 3 Demand (units) 25,500 40,500 23,500 Material cost per unit K4.35 K4.35 K4.35 Incremental fixed cost per year K45,000 K50,000 K60,000Shared fixed costs K20,000 K20,000 K20,000The selling price in year 1 is expected to be K12.00 per unit. The selling price is expected to rise by 16% per year for the remaining part of the project’s life.Material cost per unit will be constant at K4.35 due to the contract that ETM has with its suppliers. Labor cost per unit is expected to be K5.00 in year 1 rising by 10% per year beyond the first year. Fixed costs (nominal) are made of the project fixed cost and a share of head office overhead. Working capital will be…
Calculating EAC You are evaluating two different silicon wafer milling machines. The Techron I costs $265,000, has a 3-year life, and has pretax operating costs of $41,000 per year. The Techron II costs $330,000, has a 5-year life, and has pretax operating costs of $52,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $25,000. If your tax rate is 21 percent and your discount rate is 9 percent, compute the EAC for both machines. Which do you prefer? Why?
Three alternatives have the following cost data associated with them: Data Alt. 1 Alt. 2 Alt. 3 Useful Life, Years 10 10 10 First Cost $1,125,000 $1,980,000 $1,650,000 Annual Benefit 265,000 589,000 435,000 Annual M&O Costs 95,000 97,000 91,000 Salvage Value 145,000 205,000 178,000 Determine whích machine is better to purchase, if i = 10%. 1. Use a B/C 2. Use a Payback Period
A manufacturing company is trying to decide between the two machines shown below. Determine which machine should be selected on the basis of rate of return. Assume the MARR is 20% per year. Machine A Machine B Initial Cost, $ -18,000 -35,000 Annual operating cost, $/year -4,000 -3,600 Salvage value, $ 1,000 2,700 Life, years 3 6
Kenora Industries is analyzing a new project. They have gathered the following data: Worst Case Base Case Best Case Sales quantity 9000 12000 14500 Sales price per unit $10.00 $12.00 $14.00 Variable cost per unit $7.00 $8.00 $8.50 Fixed cost $14,000.00 $16,000.00 $18,000.00 Initial requirement for equipment: $140,000 Depreciation: Straight-line to zero over the four-year life of the project with no salvage value. Required rate of return: 15% Marginal tax rate: 35% What is the operating cash flow under the base-case scenario? $27,000.00 $34,300.00 $31,300.00 $36,900 $26,400.00
A firm is considering the purchase of a new machine to increase the output of an existing production process. If each of these machines provides the same service over their useful lives and the MARR is 12%, which machine would be selected on the basis of PW and apply repeatability assumption? Alternative B $75,000 Alternative C $100,000 $2,675 Alternative A Initial Investment $75,000 $20,435 Net Annual $16,212 Revenues Market Value at $15,000 $12,000 $25,000 End of Useful Life Useful Life 5 years 6 years 10 years
For the below ME alternatives, which machine should be selected based on the AW analysis. MARR-10% Machine B 27,724 6,000 Machine A Machine C First cost, $ 15000 10000 Annual cost, S/year Salvage value, $ Life, years 8,293 4,000 4,000 5,000 1,000 Answer the below questions: B- AW for machine B= For the below ME alternatives, which machine should be selected based on the AW analysis. MARR 10%. Machine A 15000 Machine B Machine C 12,409 30000 First cost, $ Annual cost, $/year Salvage value, $ Life, years 17,181 6,000 4,000 4,000 5.000 1,000 Answer the below questions: C- AW for machine C=
Shale Remodeling uses time and materials pricing. It is setting prices for next year using the following information: Labor rate, including fringe benefits $ 93 per hour Annual labor hours 6,410 hours Annual materials purchases $ 1,237,750 Materials purchasing, handling, and storage $ 247,550 Overhead for depreciation, taxes, insurance, etc. $ 711,510 Target profit margin for both labor and materials 25 % What is the total price for a project requiring 220 direct labor hours and $210,000 of materials
a) Use Repeatability Assumption to compare between three alternatives X, Y and Z at (MARR=18% per year). Project Investment cost Production rate per year 20,000 Price per unit Annual expenses Salvage value Useful life (years) A В C $90,000 $50,000 $35,000 24,000 18,000 $6 $2.8 $4 $6,000 $5,000 $4,000 $10,000 $18,000 3
Two types of power converters are under consideration for a specific application. An economic comparison is to be made using a MARR of 10% and the following cost estimates: Alternative Model A Model B Service Life (Years) 5 10 First Cost $10,000 $20,000 Salvage Value 0 5,000 Annual Operating Cost 2,500 1,200 Draw the Cash Fiow Diagram for each alfernative covering the entire analysis period. Compute the Net Present Worth for Model A? Compute the Net Equivalent Uniform Annual Worth for Model A? Which of these alternatives should be selected?

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS