Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow:

Required:

Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor-hours to allocate overhead costs. (Round your answer to 2 decimal places.)

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow:

Basic Dominator Total

Units produced 1,000 450 1,450

Machine-hours 3,000 2,800 5,800

Direct labor-hours 2,900 2,300 5,200

Direct materials costs $ 8,200 $ 3,350 $ 11,550

Direct labor costs 58,700 31,300 90,000

Manufacturing overhead costs 183,560

Total costs $ 285,110

Required:

Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor-hours to allocate overhead costs.

Predetermined overhead rate __________% per direct labor hour

The builder of a new movie theater complex is trying to decide how many screens she wants. Below are her estimates of the number of patrons the complex will attract each year, depending on the number of screens available.

After paying the movie distributors and meeting all other noninterest expenses, the owner expects to net $2.5 per ticket sold. Construction costs are $1,000,000 per screen.

Instructions: Enter your responses as whole numbers.

a. Make a table showing the value of marginal product for each screen from the first through the fifth.

What property is illustrated by the behavior of marginal products?

• Diminishing returns to capital

• Increasing returns to capital

• Negative returns to capital

b. How many screens will be built if the real interest rate is 5.5 percent?

screen(s)


c. How many screens will be built if the real interest rate is 7.5 percent?

screen(s)


d. How many screens will be built if the real interest rate is 10 percent?

screen(s)

e. If the real interest rate is 5.5 percent, what is the highest construction cost per screen that would make a five-screen complex profitable?

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The builder of a new movie theater complex is trying to decide how many screens she wants. Below are her estimates of the number of patrons the complex will attract each year, depending on the number of screens available.

After paying the movie distributors and meeting all other noninterest expenses, the owner expects to net $2.5 per ticket sold. Construction costs are $1,000,000 per screen.

Instructions: Enter your responses as whole numbers.

a. Make a table showing the value of marginal product for each screen from the first through the fifth.

What property is illustrated by the behavior of marginal products?

• Diminishing returns to capital

• Increasing returns to capital

• Negative returns to capital

b. How many screens will be built if the real interest rate is 5.5 percent?

screen(s)


c. How many screens will be built if the real interest rate is 7.5 percent?

screen(s)


d. How many screens will be built if the real interest rate is 10 percent?

screen(s)

e. If the real interest rate is 5.5 percent, what is the highest construction cost per screen that would make a five-screen complex profitable?

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow:

Required:

Compute the individual product costs per unit assuming that Tiger Furnishings uses machine-hours to allocate overhead to the products. (Do not round intermediate calculations. Round final answers to 2 decimal places.)

?Basic unit cost:

Dominatior unit cost:

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow:

Required:

Compute the individual product costs per unit assuming that Tiger Furnishings uses machine-hours to allocate overhead to the products. (Do not round intermediate calculations. Round final answers to 2 decimal places.)

Basic

Dominator

You are considering opening a drive-in movie theater and running it for ten years. You have spent after-tax $10,000 researching the land that will be used for theater, but if you take the project you expect to incur another immediate after-tax expense of $20,000 as you work with a consulting firm to decide how to most efficiently run the business.

The project entails an immediate $100,000 capital expenditure, which can be depreciated over 10 years. You expect to sell this capital investment for $25,000 at the end of the ten year project. Working capital expenses for the project are $50,000 immediately, $40,000 incurred two years from today, both of which are fully recovered in ten years (at the end of the project).

The project’s operating costs are expected to be $100,000 for each of the first five years and then (starting between t=5 and t=6) grow at -5% per year through the end of the project (i.e., through t=10). You expect the project’s revenues to start at $100,000 starting one year from today and remain constant for the life of the project.

1. (1 points) To determine the discount rate for the project, you have found an all-equity firm with a risk level similar to the company you’re starting. That firm’s equity has a standard deviation of returns of 35% and a correlation with the stock market of 0.8. The risk free rate is 4%, the expected market returns are 9.5% and the standard deviation of market returns is 28%. What is your estimated cost of capital?
2. (7 Points) You decide to use 10% as the project’s opportunity cost of capital (ignore your answer from part a). Your expected tax rate is 25%. What is the project’s NPV?
3. (2 points) You find out that the government is interested in buying the capital investment from you at the end of the project. Instead of selling it for $25,000 at the end of the project, the government will commit today to buying the capital from you for $75,000 post-tax ten years from today. You trust the government and think that this sale is risk free should you take the project. To what extent (if any) should the above information factor in to your decision regarding whether or not to open the theater? Does it change the NPV in any way, if so how? (hint: think of the capital investment as its own project – how will this affect the cash flows and/or the discount rate)

Can you add as much details as you can, Thank you!

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow:

Tiger Furnishings’s CFO believes that a two-stage cost allocation system would give managers better cost information. She asks the company’s cost accountant to analyze the accounts and assign overhead costs to two pools: overhead related to direct labor cost and overhead related to machine-hours.

The analysis of overhead accounts by the cost accountant follows:

Required:

b. Compute the product costs per unit assuming that Tiger Furnishings uses direct labor costs and machine-hours to allocate overhead to the products. (Do not round intermediate calculations.)

   BASIC DOMINATOR    TOTAL

PRODUCT COSTING
DIRECT MATERIAL    ?    ? ?
DIRECT LABOR    ?    ? ?
OVERHEAD
MACHINE-RELATED    ? ? ?
LABOR-RELATED    ?    ? ?
TOTAL-OVERHEAD    ?    ? ?
TOTAL COST ?    ? ?
UNITS PRODUCED    ? ?
UNIT COST    ?    ?

ALL THE ONES WITH QUESTIONS MARKS REQUIRED ANSWERS THANK YOU

  

The builder of a new movie theater is trying to decide how many screens she wants. Below are her estimate of the number of patrons the complex will attract each year depending on the number of screens available. Number of screens: Total number of patrons 1 50,000 2 95,000 3 135,000 4 170,000 5 195,000 The owner expects to net $2 per ticket sold. Construction costs are $1,000,000 per screen. The screen can always be resold for $1,000,000 at the end of the year. However, the builder has to borrow $1,000,000 per screen and pay the lender the prevailing interest rate.

a) What is the marginal product per screen? In other words how much revenue does each screen generate

b) How many screens will be built if the interest rate is 6%

c) How many screens will be built if the interest rate is 8.5%?

d) How many screens will be built if the interest rate is 12%