In: Economics
An ice cream store sells a pint of ice cream for $4.00 each. The shop incurs a monthly fixed cost of $2,000 which includes salaries and rental. The variable cost per pint of ice cream is $1.50. The company is currently selling 600 pints per month.
A. How many pints per month does the store need to sell to break-even?
B. Using Goal Seek what is the new selling price per pint to achieve a profit of $10,000, if the company continues to sell 600 units
C. Using Goal Seek what is the new quantity that the store must sell to achieve a profit of $10,000, if the price remains at $4
| Known parameters: | |
| Selling price per unit | |
| Fixed cost | |
| Variable cost per unit | |
| Input Data | |
| Number of units | |
| Results | |
| Total revenue | |
| Fixed cost | |
| Total variable cost | |
| Total cost | |
| Profit | |
| BEP | |
| BEP$ | |
| B. | |
| Known parameters: | |
| Selling price per unit | |
| Fixed cost | |
| Variable cost per unit | |
| Input Data | |
| Number of units | |
| Results | |
| Total revenue | |
| Fixed cost | |
| Total variable cost | |
| Total cost | |
| Profit | |
| BEP | |
| BEP$ | |
| C | |
| Known parameters: | |
| Selling price per unit | |
| Fixed cost | |
| Variable cost per unit | |
| Input Data | |
| Number of units | |
| Results | |
| Total revenue | |
| Fixed cost | |
| Total variable cost | |
| Total cost | |
| Profit | |
| BEP | |
| BEP$ |
In: Finance
A manufacturer is considering alternatives regarding the production of highly specialized and useful precision part, originally engineered and developed by the company, and supplied to the company’s main customer. The company has patented the design and the use of that particular component, so no-one else can produce it without the company’s permission, and, therefore, it is one of the most profitable products that the firm sells, providing $5M in annual revenues for the firm. Recently, however, the firm made certain improvements to the alloy used in the production of the part, something the engineers considered necessary to ensure the part meets new safety standards. Without certain modifications, the existing equipment used in the production of the part in question would not be able to handle the new alloy. In choosing how to address the problem, the company has three alternatives. All alternatives will be able to use the new alloy, will result in the same quality of finished produce, satisfying the company’s and its customer’s demands, but differ in annual maintenance costs, initial price, and longevity.
The first alternative is to keep existing equipment, but update it to handle the new alloy. The old equipment was bought three years ago, at the price of US$2.3M and is being depreciated on the straight-line basis over 8-year useful life to its expected salvage value of zero. In fact, the old equipment is already worthless on the market, because moving it somewhere else costs as much as other firms are willing to pay for it. The necessary updates, which need to be depreciated over 3 years, will not prolong the life of the equipment, but will allow to increase the quality of finished product to the necessary level. The expected cost of the necessary updates is $500K. The old equipment requires $300,000 in annual maintenance expense.
The second alternative is to replace the old equipment with new one. The new equipment would cost US$1.7M to buy and install, requires $500,000 in annual maintenance expense, but has a useful life of 5 years. It is also depreciated using straight-line method but has a salvage value of $200,000 at the end of its life.
The third alternative is to outsource the production of the part to an external contractor. The management expected that external contractors would charge $800K per year to produce the required quantity of the product, at the required quality, using the newly-developed alloy.
What alternative would be the least costly for the company and what alternative should the company choose? The company’s weighted average cost of capital is 10% and its marginal rate of income tax is 21%.
Instructions:
- Read carefully
- Figure out each alternative
- This is one question.
In: Finance
The Walt Disney Company is planning to add a new rollercoaster to its park in Anaheim, California. The cost to purchase and build this rollercoaster will be $12,000,000 and will cost $80,000 in maintenance every year. Disney will also assign staff to organize lines and guide visitors through these rollercoasters. The salary of the staff is expected to be $100,000 every 6 months. After 10 years of operation, the rollercoaster equipment needs to be remodeled at a cost of $1,000,000. During remodeling, it will be unavailable to visitors for 6 months. The rollercoaster will be operational for another 9.5 years, after which it will be considered obsolete. Its estimated salvage value at that time is $1,500,000.
The management of the Disneyland estimates that the rollercoaster will attract 20,000 people in the first six months of operation, and that this figure will grow by 3% per semester (6 months). Assume that during the major upgrade, the number of additional visitors is zero and that the number of visitors after the rollercoaster starts again is the same number as immediately before the major upgrade (the growth rate remains 3%). The benefit per visitor is $10.50 and the interest rate is 7% per year compounded semi- annually.
a) Draw the cash-flow diagram.
b) What is the benefit (in today’s $$) of this investment?
c) What is the cost to Walt Disney company (in today’s $$)?
d) Determine the benefit-cost ratio. Should the Walt Disney management pursue the investment?
e) In case the management should not pursue it, what would be the minimum required benefit per visitor such that the investment can be considered profitable?
THESE IS ALL THE INFORMATION NECESSARY TO COMPLETE THE PROBLEM. THERE IS NO OTHER NECESSARY INFO
In: Accounting
Complete the hypothetical table below and explain in brief, the behavior of each type of cost.
|
Quantity |
Total Fixed Cost |
Total Variable Cost |
Total Cost |
Average Fixed Cost |
Average Variable Cost |
Average Total Cost |
Marginal Cost |
|
0 |
0 |
||||||
|
1 |
25 |
||||||
|
2 |
40 |
||||||
|
3 |
50 |
||||||
|
4 |
60 |
||||||
|
5 |
100 |
80 |
|||||
|
6 |
110 |
||||||
|
7 |
150 |
||||||
|
8 |
300 |
||||||
|
9 |
500 |
||||||
|
10 |
900 |
In: Economics
the marcus hotel borrows $200000 from the spartan national bank
the details are as follows:
a. Term of loan = 5 years
b. amortization rate = based on 10 years
c. frequency of payment = annual
d. interest rate = 6% required
1. prepare a loan amortization table for five years
2. what percentage of the loan was paid off over the five year
period?
3. what was the total amount of interest paid?
4. what amount of interest will be paid over the 10 life of the
loan?
a. how much be invested today to have 5,000 in five years if the interest rate is 6%?
b. at an effectives interest rate of 9%, what approximate amount will an investor have in 24 years if $5,000 is invested today?
c. Your sister, who is 6 years old today, just received a trust fund that will be worth $25,000 when she turns 21. IF the fund earns annual interest of 10% compounded quarterly, what is it today?
In: Accounting
|
An amusement park studied methods for decreasing the waiting time (minutes) for rides by loading and unloading riders more efficiently. Two alternative loading/unloading methods have been proposed. To account for potential differences due to the type of ride and the possible interaction between the method of loading and unloading and the type of ride, a factorial experiment was designed. Use the following data to test for any significant effect due to the loading and unloading method, the type of ride, and interaction. Use a=.05 . Factor A is method of loading and unloading; Factor B is the type of ride.
Set up the ANOVA table (to whole number, but p-value to 2 decimals and F value to 1 decimal, if necessary).
|
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In: Statistics and Probability
An amusement park studied methods for decreasing the waiting time (minutes) for rides by loading and unloading riders more efficiently. Two alternative loading/unloading methods have been proposed. To account for potential differences due to the type of ride and the possible interaction between the method of loading and unloading and the type of ride, a factorial experiment was designed. Use the following data to test for any significant effect due to the loading and unloading method, the type of ride, and interaction. Use . Factor A is method of loading and unloading; Factor B is the type of ride.
| Type of Ride | |||
| Roller Coaster | Screaming Demon | Long Flume | |
| Method 1 | 46 | 54 | 50 |
| 48 | 46 | 46 | |
| Method 2 | 45 | 54 | 48 |
| 47 | 50 | 44 | |
Set up the ANOVA table (to whole number, but -value to 2 decimals and value to 1 decimal, if necessary).
| Source of Variation | Sum of Squares | Degrees of Freedom | Mean Square | -value | |
| Factor A | |||||
| Factor B | |||||
| Interaction | |||||
| Error | |||||
| Total |
In: Statistics and Probability
An amusement park studied methods for decreasing the waiting time (minutes) for rides by loading and unloading riders more efficiently. Two alternative loading/unloading methods have been proposed. To account for potential differences due to the type of ride and the possible interaction between the method of loading and unloading and the type of ride, a factorial experiment was designed. Use the following data to test for any significant effect due to the loading and unloading method, the type of ride, and interaction. Use . Factor A is method of loading and unloading; Factor B is the type of ride.
| Type of Ride | |||
| Roller Coaster | Screaming Demon | Long Flume | |
| Method 1 | 43 | 51 | 50 |
| 45 | 43 | 46 | |
| Method 2 | 50 | 48 | 52 |
| 52 | 44 | 48 | |
Set up the ANOVA table (to whole number, but -value to 2 decimals and value to 1 decimal, if necessary).
| Source of Variation | Sum of Squares | Degrees of Freedom | Mean Square | -value | |
| Factor A | |||||
| Factor B | |||||
| Interaction | |||||
| Error | |||||
| Total |
In: Statistics and Probability
An amusement park studied methods for decreasing the waiting time (minutes) for rides by loading and unloading riders more efficiently. Two alternative loading/unloading methods have been proposed. To account for potential differences due to the type of ride and the possible interaction between the method of loading and unloading and the type of ride, a factorial experiment was designed. Use the following data to test for any significant effect due to the loading and unloading method, the type of ride, and interaction. Use . Factor A is method of loading and unloading; Factor B is the type of ride.
|
Type of Ride |
|||
|
Roller Coaster |
Screaming Demon |
Long Flume |
|
|
Method 1 |
42 |
54 |
46 |
|
44 |
46 |
42 |
|
|
Method 2 |
47 |
53 |
49 |
|
49 |
49 |
45 |
|
Set up the ANOVA table (to whole number, but -value to 2 decimals and value to 1 decimal, if necessary).
|
Source of Variation |
Sum of Squares |
Degrees of Freedom |
Mean Square |
-value |
|
|
Factor A |
|||||
|
Factor B |
|||||
|
Interaction |
|||||
|
Error |
|||||
|
Total |
In: Statistics and Probability