Question
In: Finance
Java Coffee Co is looking for a supplier for Coffee beans for the next 4 years....
Java Coffee Co is looking for a supplier for Coffee beans for the next 4 years. They have a demand for 130,000 bags of coffee beans per year. Your company is submitting a bid for this project. This project requires initial investment of $765,000 in specialized machinery. This machinery will be depreciated using straight-line to zero over the life of the project (4 years). This machinery can be sold for $375,000 at the end of the project. Your fixed production costs will be $190,000 per year, and your variable production costs should be $8.20 per bag. You also need an initial investment in net working capital of $59,500, all of which will be recovered when the project ends. Your tax rate is 22 percent and you require a return of 14.5 percent. What bid price per bag should you submit?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Case 18-1 Coffee Co. Coffee Co. (the “Company”) is a global distributor of organic coffee beans...
Case 18-1 Coffee Co.
Coffee Co. (the “Company”) is a global distributor of organic
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States. The Company’s operations are primarily located in the
United States, Canada, and South America. In March 20X8, Coffee
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entered into an agreement (the “Agreement”) with Nature’s Beverage,
a food distributor in the United States looking to expand its
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Case 18-1 Coffee Co. Coffee Co. (the “Company”) is a global distributor of organic coffee beans...
Case 18-1 Coffee Co.
Coffee Co. (the “Company”) is a global distributor of organic
coffee beans and teas that is registered with the SEC in the United
States. The Company’s operations are primarily located in the
United States, Canada, and South America. In March 20X8, Coffee
Co., looking to refocus efforts to only produce coffee products,
entered into an agreement (the “Agreement”) with Nature’s Beverage,
a food distributor in the United States looking to expand its
international footprint (the “Transaction”)....
Case 18-1 Coffee Co. Coffee Co. (the “Company”) is a global distributor of organic coffee beans...
Case 18-1 Coffee Co. Coffee Co. (the “Company”) is a global
distributor of organic coffee beans and teas that is registered
with the SEC in the United States. The Company’s operations are
primarily located in the United States, Canada, and South America.
In March 20X8, Coffee Co., looking to refocus efforts to only
produce coffee products, entered into an agreement (the
“Agreement”) with Nature’s Beverage, a food distributor in the
United States looking to expand its international footprint (the
“Transaction”)....
Coffee Co. (the “Company”) is a global distributor of organic coffee beans and teas that is...
Coffee Co. (the “Company”) is a global distributor of organic
coffee beans and teas that is registered with the SEC in the United
States. The Company’s operations are primarily located in the
United States, Canada, and South America. In March 20X8, Coffee
Co., looking to refocus efforts to only produce coffee products,
entered into an agreement (the “Agreement”) with Nature’s Beverage,
a food distributor in the United States looking to expand its
international footprint (the “Transaction”). Nature’s Beverage is
registered...
CNY Coffee Inc. uses three types of coffee beans (Columbia, Java, and Brazil) as mixtures to...
CNY Coffee Inc. uses three types of coffee beans (Columbia,
Java, and Brazil) as mixtures to manufacture its two coffee
products (Energy, and Everyday). The cost per pound, the
availability, and rating information of the coffee beans are as
follows.
Coffe Bean
Cost Per Pound
Caffeine Rating
Taste Ratting
Aroma Rating
Available Pounds
Columbia
$2.25
68
90
88
695
Java
$1.70
78
63
77
880
Brazil
$1.95
85
80
95
955
Coffee product tests are used to provide ratings on...
Hana Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into...
Hana Coffee Company roasts and packs coffee beans. The process
begins by placing coffee beans into the Roasting Department. From
the Roasting Department, coffee beans are then transferred to the
Packing Department. The following is a partial work in process
account of the Roasting Department at July 31:
ACCOUNT Work in Process—Roasting
Department
ACCOUNT NO.
Date
Item
Debit
Credit
Balance
Debit
Credit
July
1
Bal., 5,400 units, 2/5 completed
10,476
31
Direct materials, 243,000 units
437,400
447,876
31
Direct labor...
Hana Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into...
Hana Coffee Company roasts and packs coffee beans. The process
begins by placing coffee beans into the Roasting Department. From
the Roasting Department, coffee beans are then transferred to the
Packing Department. The following is a partial work in process
account of the Roasting Department at July 31: ACCOUNT Work in
Process—Roasting Department ACCOUNT NO. Date Item Debit Credit
Balance Debit Credit July 1 Bal., 5,400 units, 2/5 completed 13,392
31 Direct materials, 243,000 units 558,900 572,292 31 Direct labor...
Hana Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into...
Hana Coffee Company roasts and packs coffee beans. The process
begins by placing coffee beans into the Roasting Department. From
the Roasting Department, coffee beans are then transferred to the
Packing Department. The following is a partial work in process
account of the Roasting Department at July 31:
ACCOUNT Work in Process—Roasting
Department
ACCOUNT NO.
Date
Item
Debit
Credit
Balance
Debit
Credit
July
1
Bal., 4,900 units, 4/5 completed
6,958
31
Direct materials, 220,500 units
264,600
271,558
31
Direct labor...
Hana Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into...
Hana Coffee Company roasts and packs coffee beans. The process
begins by placing coffee beans into the Roasting Department. From
the Roasting Department, coffee beans are then transferred to the
Packing Department. The following is a partial work in process
account of the Roasting Department at July 31:
ACCOUNT Work in Process—Roasting
Department
ACCOUNT NO.
Date
Item
Debit
Credit
Balance
Debit
Credit
July
1
Bal., 30,000 units, 10% completed
121,800
31
Direct materials, 155,000 units
620,000
741,800
31
Direct labor...
Gourmet Coffee has an exclusive contract with distributors of coffee beans. Two brands of coffee beans...
Gourmet Coffee has an exclusive contract with distributors of
coffee beans. Two brands of coffee beans are imported, Arabica and
Robusta, and sold to retail outlets. The monthly budget
for the contract is based on a combination of last year’s
performance, a forecast of general industry sales, and the
company’s expected share of the Canadian market for imported
coffee. The following information is provided for the month of
May:
Budgeted
Actual
Arabica
Robusta
Arabica
Robusta
Price per kg.
$10.00
$12.00...
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