Question

In: Accounting

Cupid Company sells boxes of chocolates. They currently offer two different types, heart shaped and cupid...

Cupid Company sells boxes of chocolates. They currently offer two different types, heart shaped and cupid shaped. They sell 8,750 cupid shaped boxes for $18.75 and 10,000 heart shaped boxes for $15.00 each. Cupid Company has $18,000 of fixed costs (non-plant). Both boxes currently have an extremely manual manufacturing process. The cupid shaped box costs $7.50 each to make, comprised of $1.50 in variable overhead, $2.10 in direct materials, direct labor cost $8.15 per hour and it takes employees 28.72 minutes per box. The heart shaped box costs $6.00 each to make, comprised of $1.50 in variable overhead, $1.58 in direct materials, $8.15 per hour for direct labor; it takes employees 21.5 minutes per box.

One of the employees, Venus, proposed a cost savings plan. Her plan was to purchase a new chocolate picking machine, which would cut direct labor by 40%. The machine costs $785,000 and would last the company 6 years with a $20,000 salvage value. They would be able to sell the machine at the end of six years for $35,000.

Venus was discussing her plan with a co-worker, Aphrodite. Aphrodite believed that sales were currently constrained by available space and labor. She believed that in addition to reducing labor costs, Cupid Company would also be able to increase sales of each style by 5%. Additionally, she proposed a new product be offered; chocolate flower bouquets. The company would be able to see 3,200 units at $30 each. The cost would be $10.50 per bouquet, comprised of $1.50 in variable overhead, $7.00 in direct materials, $8.15 per hour for direct labor and it takes employees 14.73 minutes per bouquet. Additionally, fixed costs would increase by $5,000.

Cupid Company's desired rate of return is 15%, has a 30% tax rate and they use straight-line depreciation for all plant assets. All numbers provided are pre-tax.

For each scenario detailed above (current scenario, Venus' proposal and Aphrodite's proposal), create an Income Statement for each year of the project.

On EXCEL Please

Solutions

Expert Solution


Related Solutions

Cupid Company sells boxes of chocolates. They currently offer two different types, heart shaped and cupid...
Cupid Company sells boxes of chocolates. They currently offer two different types, heart shaped and cupid shaped. They sell 8,750 cupid shaped boxes for $18.75 and 10,000 heart shaped boxes for $15.00 each. Cupid Company has $18,000 of fixed costs (non-plant). Both boxes currently have an extremely manual manufacturing process. The cupid shaped box costs $7.50 each to make, comprised of $1.50 in variable overhead, $2.10 in direct materials, direct labor cost $8.15 per hour and it takes employees 28.72...
Cupid Company sells boxes of chocolates. They currently offer two different types, heart shaped and cupid...
Cupid Company sells boxes of chocolates. They currently offer two different types, heart shaped and cupid shaped. They sell 8,750 cupid shaped boxes for $18.75 and 10,000 heart shaped boxes for $15.00 each. Cupid Company has $18,000 of fixed costs (non-plant). Both boxes currently have an extremely manual manufacturing process. The cupid shaped box costs $7.50 each to make, comprised of $1.50 in variable overhead, $2.10 in direct materials, direct labor cost $8.15 per hour and it takes employees 28.72...
Cupid Company sells boxes of chocolates. They currently offer two different types, heart shaped and cupid...
Cupid Company sells boxes of chocolates. They currently offer two different types, heart shaped and cupid shaped. They sell 8,750 cupid shaped boxes for $18.75 and 10,000 heart shaped boxes for $15.00 each. Cupid Company has $18,000 of fixed costs (non-plant). Both boxes currently have an extremely manual manufacturing process. The cupid shaped box costs $7.50 each to make, comprised of $1.50 in variable overhead, $2.10 in direct materials, direct labor cost $8.15 per hour and it takes employees 28.72...
1. Panther Corporation sells boxes of chocolates. They currently offer two different types, flip flop shaped...
1. Panther Corporation sells boxes of chocolates. They currently offer two different types, flip flop shaped candies and sun shaped candies. Currently, the average after-tax cash flows are $83,525 per year. One of the employees, proposed a cost savings plan. Her plan was to purchase a new chocolate filing machine, which would decrease direct labor by automating some of the process. The machine costs $22,000 and would last the company 6 years. The average after-tax cash flows after the implementation...
Boxes Ltd manufactures two types of boxes, plastic and cardboard, and currently it applies manufacturing overhead...
Boxes Ltd manufactures two types of boxes, plastic and cardboard, and currently it applies manufacturing overhead to all units at the rate of $50 per direct labour hour. Production information is as follows:                   Product Information Plastic box Cardboard box Direct material cost per unit   $20 $10 Direct labour cost per hour $20 $10 Number of units produced 100,000 200,000 The management accountant Sally suggests that Activity-Based Costing (ABC) is more appropriate for the firm. She suggests the firm’s overhead...
Matilda makes specialized chocolates. Her two best-selling chocolates, the chocolate heart and the chocolate flower, are...
Matilda makes specialized chocolates. Her two best-selling chocolates, the chocolate heart and the chocolate flower, are made by pouring milk chocolate into a mold. A heart requires 3.5 ounces of milk chocolate and earns a profit of 20 cents, while a flower requires 1.5 ounces of milk chocolate and earns a profit of 30 cents. If she has 663 ounces of milk chocolate available and she wants to make at least twice as many hearts as flowers, what is the...
Jones Company produces and sells cookies. The company manufactures two different types of cookies; Chocolate Chip...
Jones Company produces and sells cookies. The company manufactures two different types of cookies; Chocolate Chip and Double Chocolate. The company produced 10,000 Chocolate Chip and 12,000 Double Chocolate cookies for the period. The following information is available for their company for this same period based on this level of production: Volume of Activity Activity Allocation Base Overhead Costs Chocolate Chip Double Chocolate Machine setup Number of setup $275,000 500 500 Production Machine hours $1,250,000 28,500 21,500 Assembly Direct labor...
Molson currently sells 41 different brands of beer in Canada. Labatt currently sells 17 different brands....
Molson currently sells 41 different brands of beer in Canada. Labatt currently sells 17 different brands. The manager at Mike's Place needs to choose 5 Molson brands and 5 Labatt brands to sell. How many options do they have? The 10 beers (5 Labatt, 5 Molson) selected in the previous question must be placed in a line on a display shelf so that no two Molson products are adjacent and no two Labatt products are adjacent. How many ways are...
Molson currently sells 41 different brands of beer in Canada. Labatt currently sells 17 different brands....
Molson currently sells 41 different brands of beer in Canada. Labatt currently sells 17 different brands. The manager at Mike's Place needs to choose 5 Molson brands and 5 Labatt brands to sell. How many options do they have? The 10 beers (5 Labatt, 5 Molson) selected in the previous question must be placed in a line on a display shelf so that no two Molson products are adjacent and no two Labatt products are adjacent. How many ways are...
Conigan Box Company produces cardboard boxes. The market is highly competitive, with boxes currently selling for...
Conigan Box Company produces cardboard boxes. The market is highly competitive, with boxes currently selling for $10 per box. Conigan's total curves are: TC = 10 + 4q + q2 where Q is measured in thousand box bundles per year. a. Calculate Conigan's profit maximizing quantity, q=??? What is the firm profit? profit=??? (please enter integers, if it's a negative number, for example, please enter -5) b. Analyze Conigan's position in terms of the shutdown condition. Should Conigan operate or...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT