A company located on the sea has the following cost sheet:
Cost per unit GH₵
Raw Materials 60
Direct Labour 20
Overheads       40
Total Cost      120
Profit             20
Selling Price 140
The following is also made available
• Average raw material in stock is equivalent to 30days
• Average material in process is 15 days
• Credit all owned by suppliers is 30days
• Time lag in payment of wages is 10 days
• Time lag in payment of overheads is 30 days
• 25% of sales are on cash basis
• Credit allowed to debtors is 60 days
• The company wishes to keep cash amounting to GH₵120,000
• Average finished goods in stock is 30 days

Required:
As a management consultant, you have been contacted to prepare a statement to be presented to the Board of Directors showing the working capital required to finance 70,000 units of output. Assume 365 days in a year.

In a process cost flow, which of the manufacturing cost accounts (Raw Materials Inventory, Manufacturing Overhead, and Factory Labor) is debited at the time the costs are incurred and credited at the time the costs are assigned to Work in Process accounts?

Hummingbird Company uses the product cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing 25,000 units of Product K are as follows:

Hummingbird desires a profit equal to a 5% rate of return on invested assets of $642,500.

a. Determine the amount of desired profit from the production and sale of Product K.
$_________

b. Determine the total manufacturing costs and the cost amount per unit for the production of 25,000 units of Product K.

c. Determine the markup percentage for Product K. Round your answer to one decimal place.
%__________

d. Determine the selling price of Product K. Round your answer to two decimal places.
$_________

A3-10. Imagine a firm with the short run cost structure: Total Cost (TC) = 9 + q 2  Marginal Cost (MC) = 2q.

(a) Write out expressions for total fixed cost (FC), total variable cost (VC), average variable cost (AVC), and average total cost (ATC). Be sure to show your work.

(b) At what quantity is AVC at its minimum (at what AVC level)? At what quantity is ATC at its minimum (at what ATC level)?

(c) Given your results above, sketch MC and AVC from q = 0 to q = 9. Calculate ATC for q = 1, 3, 6, and 9. Use this information to add ATC to your diagram (from q = 1 to q = 9).

(d) Assuming that the firm is a price-taker operating in a competitive market, derive an expression for the firm’s supply curve, (ie. the profit maximizing output for the firm as a function of the market price). What is the shut-down price for this firm (ie. at what price would this firm choose to produce zero)?

(e) Suppose the competitive market is composed of firms (and potential firms) identical to the one described above. Is it possible that a market price of $8 is a short run equilibrium price? Is it possible that a market price of $4 is a short run equilibrium price? Explain.

(f) Assuming that the minimum point of the short run ATC curve for all firms is also the minimum point of the long run average cost curve (LRAC) is it possible that either of the prices identified in part (e) is a long run equilibrium price? Explain.

(g) Under the assumptions of parts (e) and (f), what is the long run equilibrium price in this market? If, at that price, the quantity demanded in the market is 882 units, what is long run equilibrium number of firms in this market?

The following data pertain to an investment proposal

Cost of investment 45,000

annual Cost savings 10,000

Estimated salvage value 0

Expected life of investemnt 5 years

discount Rate 10%

What is the net present Value of the proposed investment

1*Explain the general theory of cost of capital and explain why businesses need to understand cost of capital.

DEF Manufacturing Company presented the following data:

• Cost of goods manufactured and cost of goods sold were P375,000 and P300,000, respectively.
• Purchases of raw materials amounted to twice as much as the net income before tax.
• Gross margin based on sales was 40%. There were no purchase returns but the sales returns amounted to P10,000.
• Inventory valuations were as follows:

1. Raw materials on hand at the end of the period was 1/3 as much as much as at start.
2. Work in process – no beginning inventory but P25,000 was on hand at the end of the period.
3. Finished goods end of the period was four times as larges as at start.

• Breakdown of cost incurred in manufacturing was as follows:

Raw materials                                                    50%

Direct labor                                                         30%

Factory Overhead                                            20%

• Selling expenses amounted to four times as as as general expenses
• Net income after taxes amounted to P52,000. Income tax rate is 35%.

1-A. Raw materials beginning? ________

1-B. Raw materials Purchases? _______

1-C Total direct materials used? _______

1-D Total factory overhead applied? ______

1-E Finished Goods ending? _________

Our company is considering a new machine which cost $1,000,000. The old machine cost $500,000, and was being depreciated to a zero book value over a 10 year period. The old machine is 5 years old, and could be sold for $300,000. The new machine will be depreciated to zero over 10 years, and could be sold for $400,000 at the end of 10 years. The new machine would require $50,000 to install, and increase net working capital by $30,000. The new machine would increase revenue by $200,000 per year and reduce our expenses by $50,000 per year. Calculate the net present value and IRR, with a tax rate of 35%, and a cost of capital of 11%. (Straight line depreciation)

DowlingComputers makes 5,000units of a circuit​ board,CB76 at a cost of $280

each. Variable cost per unit is $220and fixed cost per unit is $60.Peach Electronics offers to supply 5,000units of CB76 for

$260.IfDowlingbuys from Peach it will be able to save $10per unit in fixed costs but continue to incur the remaining $50per unit. Should Dowling

accept​ Peach'soffer? Explain

1. DowlingComputers makes5,000units of a circuit​ board,CB76 at a cost of $280

each. Variable cost per unit is $220and fixed cost per unit is $60.Peach Electronics offers to supply5,000units of CB76 for $260.If Dowlingbuys from Peach it will be able to save $10per unit in fixed costs but continue to incur the remaining $50per unit. Should Dowlingaccept​ Peach'soffer? Explain.

Begin by calculating the relevant cost per unit. ​(Ifa box is not used in the​ table,leave the box​ empty;do not enter a​ zero.)

DowlingComputers should accept/rejectPeach'soffer. When comparing relevant costs between thechoices,Peach's offer price is higher/lowerthan the cost to continue to produce.