Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $125,080, including freight and installation. Henrie’s has estimated that the new machine would increase the company’s cash inflows, net of expenses, by $40,000 per year. The machine would have a five-year useful life and no salvage value.

Required: 1. Compute the machine’s internal rate of return. (Round your 'IRR' answer to nearest whole percentage.)

2. Compute the machine’s net present value. Use a discount rate of 18%.

3. Suppose that the new machine would increase the company’s annual cash inflows, net of expenses, by only $34,700 per year. Under these conditions, compute the internal rate of return. (Round your 'IRR' answer to nearest whole percentage.)

EBIT Sensitivity   Stewart Industries sells its finished product for $ 8.66 per unit. Its fixed operating costs are $ 18 comma 800​, and the variable operating cost per unit is $ 4.03. a. Calculate the​ firm's earnings before interest and taxes​ (EBIT) for sales of 9 comma 000 units. b. Calculate the​ firm's EBIT for sales of 7 comma 000 and 11 comma 000 ​units, respectively. c. Calculate the percentage changes in sales​ (from the 9 comma 000​-unit base​ level) and associated percentage changes in EBIT for the shifts in sales indicated in part ​(b​). d. On the basis of your findings in part ​(c​), comment on the sensitivity of changes in EBIT in response to changes in sales.

a. The​ firm's earnings before interest and taxes is ​$ nothing. ​(Round to the nearest​ dollar.)

Race One Motors is an Indonesian car manufacturer. At its largest manufacturing? facility, in? Jakarta, the company produces subcomponents at a rate of 295 per? day, and it uses these subcomponents at a rate of 12,100 per year? (of 250 working? days). Holding costs are ?$3 per item per? year, and ordering costs are ?$31 per order.

a. what is the economic production quantity? (round to two decimal places)

b. how many production runs per year will be made? (round to two decimal places)

c. what will be the maximum inventory level? (round to two decimal places)

d. what percentage of time will the facility be producing components? (enter your response as a percentage rounded to two decimal places)

e. what is the annual cost of ordering and holding inventory? (round to two decimal places)

partial income statements for Sherwood company summarized for a four year period show the following

2015    2016 2017 2018

net sales    2,200.000    2,600.000    2,700.000 3,200.000

cost of goods sold    1,496.000    1,742.000    1,863.000 2,176.000

gross profit 704.000 858.000 837.000 1,024.000

an audit reveled that in determining these amounts, the ending inventory for 2016 was overstated by $22,000. the inventory balance on December 31, 2017. was accurately stated. the company uses a periodic inventory system

1\ restate the partial income statements to reflect the correct amounts after fixing the inventory error

2\ compute the gross profit percentage for each year (a) before the correction and (b) after the correction

2.a\ does the pattern of gross profit percentage lend confidence to your corrected amount

A. An earthwork contract requires to cut and move excavated rocks. The site is a typical limestone rock formation in a cut section, which is 15,000 ft long, 85 ft wide, and 3 ft deep. Seismographic tests indicate a seismic wave velocity of 5,000 fps for the rock layer material. The contractor proposes to rip the rock with a 370-hp crawler tractor. Answer the following questions.

(a) Calculate the production in bcy per hour, for full-time ripping, with efficiency based on a 45         -min hour. Assume that the ripper is equipped with a single shank and that ripping conditions are average (i.e., intermediate between extreme conditions). This is classified as heavy ripping.

(b) Estimate the ripping unit-production cost in dollars per bcy using your calculated hourly production. The normal O&O cost per hour, including operator, for a tractor w/ ripper $130.00. The operator’s wage with fringe is $33.00 per hour.

(c) What is the total direct cost of the cut quantity?

(d) What is the total duration of the rock cut project assuming 10 hours per day work?

B. As a Construction Manager for this site development project, prepare detailed cost estimate for the project, and bid documents.

      Assume 10% time value cost of money, bonds, insurance, and storage over total direct cost, contingency at 2% of total direct cost, indirect overhead cost at 5% of total direct cost (additional on top of the equipment and operator costs), and 10% fee (on subtotal total of direct and indirect cost).

Variable and Fixed Costs, Cost Formula, High-Low Method

Li Ming Yuan and Tiffany Shaden are the department heads for the accounting department and human resources department, respectively, at a large textile firm in the southern United States. They have just returned from an executive meeting at which the necessity of cutting costs and gaining efficiency has been stressed. After talking with Tiffany and some of her staff members, as well as his own staff members, Li Ming discovered that there were a number of costs associated with the claims processing activity. These costs included the salaries of the two paralegals who worked full time on claims processing, the salary of the accountant who cut the checks, the cost of claims forms, checks, envelopes, and postage, and depreciation on the office equipment dedicated to the processing. Some of the paralegals’ time appears to vary with the routine processing of uncontested claims, but considerable time also appears to be spent on the claims that have incomplete documentation or are contested. The accountant’s time appears to vary with the number of claims processed.

Li Ming was able to separate the costs of processing claims from the costs of running the departments of accounting and human resources. He gathered the data on claims processing cost and the number of claims processed per month for the past 6 months. These data are as follows:

Required:

1. Classify the claims processing costs that Li Ming identified as variable and fixed.

2. What is the independent variable?

What is the dependent variable?

3. Use the high-low method to find the fixed cost per month.
$

Use the high-low method to find the variable rate. Round to two decimal places.
$ per claim

What is the cost formula?
Total cost of claims processing = $ + ( $ per unit ×   )

4. Conceptual Connection: Suppose that an outside company bids on the claims processing business. The bid price is $4.60 per claim. If Tiffany expects 75,600 claims next year, should she outsource the claims processing or continue to do it in-house?

1.) (15 pts.) Miamiville Interiors is a small shop that produces a variety of items that are sold through home improvement departments at local hardware stores. Among the items MI produces are replacement cabinet facings for kitchen and bathroom cabinets. The production manager must decide how many of each of two types of cabinet should be produced in the next production period. The net revenues and demand for each type of cabinet are listed in the table below. Also, in the table are production cost per unit and the units available for each of three types of wood used in the cabinet construction. Revenue per unit Maple Pine Walnut Demand Cabinet A $8 6 11 400 Cabinet B 13 4 9 600 Cost/unit $3.00 $1.80 $3.75 Units Available 400 600 200 Formulate a linear program to determine how many of each of the types of cabinet should be produced, using each type of wood. You seek to maximize profit (revenue – cost), while satisfying demand for the two cabinet styles.

Toll lanes on a section of the​ I-40 freeway are being considered in order to reduce traffic congestion and travel times. Since this is a government​ project, the​ B-C ratio method must be applied in the evaluation. The following are cost and other​ estimates:

Construction costs​ = ​$17,300,000

Operating and maintenance costs​ = ​$532,000 per year

Projected service life​ = 30 years

Savings in travel times and revenues generated from the tolls​ = ​$5,244,000 in the first year of operation and projected to increase by 2.75​% per year due to the projected annual increase in traffic. In​ addition, environmental analysis estimates that the project will result in increased noise and air pollution that will cause an additional societal health cost of ​$644,000 the first year and is also projected to increase at 2.75​% per year.

Assuming zero market​ (salvage) value at the end of 30 years and a MARR of 10​%per​ year, should the toll lanes be​constructed?

The conventional​ benefit-cost ratio of the project with PW is______​(Round to two decimal​ places.)

According to the​ B-C ratio​ method, the toll lanes should

A.not be constructed

B. be constructed

#1

Toll lanes on a section of the​ I-40 freeway are being considered in order to reduce traffic congestion and travel times.

Since this is a government​ project, the​ B-C ratio method must be applied in the evaluation. The following are cost and other​ estimates:

-Construction costs​=​$17,200,000

Operating and maintenance costs​ =​$521,000 per year

Projected service life​ =24 years

Savings in travel times and revenues generated from the tolls​ =​$5,152,000 in the first year of operation and projected to increase by 2.5% per year due to the projected annual increase in traffic. In​ addition, environmental analysis estimates that the project will result in increased noise and air pollution that will cause an additional societal health cost of $552,000 the first year and is also projected to increase at 2.5% per year.Assuming zero market​ (salvage) value at the end of 24 years and a MARR of 9​% per​ year, should the toll lanes be constructed?

a). The conventional​ benefit-cost ratio of the project with PW is_______

b). According to the​ B-C ratio​ method, the toll lanes should be constructed or not?

Berry Company is an architectural firm located in Toronto, Ontario. The company works with small and medium-size construction businesses to prepare building plans according to client contract. Berry employs 10 professionals and 5 staff. The following data are provided for last year:

Number of designs completed and sold                      700

Beginning inventory of direct materials                $20,000

Beginning inventory of designs in process          $60,000

Ending inventory of direct materials                                 $0

Ending inventory of designs in process                $100,000

Purchases, direct materials                                    $40,000

Direct labour                                                             $800,000

Manufacturing overhead                                         $100,000

Administrative expense                                           $150,000

Selling expense                                                        $60,000

Required:

1. Calculate the cost of services sold.

2. Assume that the average fee for a design is $2,100 Prepare an income statement for Berry Company.

3. Refer to the cost of services sold (calculated in Requirement 1). What is the dominant cost Will this always be true of service organizations? If not, provide an example of an exception

4. Why does Berry Company show zero inventory of finished plans? What change(s) in the company could result in a positive finished goods inventory?