Wendell’s Donut Shoppe is investigating the purchase of a new $42,700 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $6,400 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,400 dozen more donuts each year. The company realizes a contribution margin of $2.00 per dozen donuts sold. The new machine would have a six-year useful life.

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes?

2. What discount factor should be used to compute the new machine’s internal rate of return? (Round your answers to 3 decimal places.)

3. What is the new machine’s internal rate of return? (Round your final answer to nearest whole percentage.)

4. In addition to the data given previously, assume that the machine will have a $12,840 salvage value at the end of six years. Under these conditions, what is the internal rate of return? (Round your final answer to nearest whole percentage.)

create a proforma balance sheet and incomes statement; and use them to estimate external funds needed.

Can please put it in excel if possible

Vice President for Sales and Marketing Sam Totter is trying to plan for the coming year in terms of production needs to meet the sales demand. He is also trying to determine ways in which the company’s profits might be increased in the coming year.

Instructions (Do all six parts):

Waterways markets a simple water control and timer that it mass-produces. During last year, the company sold 701,000 units at an average selling price of 4.20 per unit. The variable expenses were $1,857,650 and the fixed expenses were $646,450.

What is the product’s contribution margin ratio? (Round to nearest whole percentage.)

What is the company’s break-even point in units and in dollars for this product?

What is the margin of safety, both in dollars and as a ratio? (Round to nearest whole percentage.)

If management wanted to increase its net operating income from this product by 10%, how many additional units would have to be sold to reach this income level?

If sales increase by 51,000 units and the cost behaviors do not change, how much will net operating income increase on this product?

Waterways’ management believes that increased advertising would increase unit sales by 10%. If management wants to increase its operating income by $50,000, how much could the company spend on additional advertising to reach its goal?

​(Constant dividend payout ratio policy​)

The Blunt Trucking Company needs to expand its fleet by 70 percent to meet the demands of two major contracts it just received to transport military equipment from manufacturing facilities scattered across the United States to various military bases. The cost of the expansion is estimated to be $11million. Blunt maintains a 40 percent debt ratio and pays out 50 percent of its earnings in common stock dividends each year.

a. If Blunt earns $4 million next​ year, how much common stock will the firm need to sell in order to maintain its target capital​ structure?

b. If Blunt wants to avoid selling any new stock but wants to maintain a constant dividend payout percentage of 50

​percent, how much can the firm spend on new capital​ expenditures?

a. If Blunt earns $4 million next​ year, how much common stock will the firm need to sell in order to maintain its target capital​ structure?

​$ million  ​(Round to two decimal​ places.)

b. If Blunt wants to avoid selling any new stock but wants to maintain a constant dividend payout percentage of

50 ​percent, how much can the firm spend on new capital​ expenditures?

​$ million  ​(Round to two decimal​ places.)

Orange Corp. has two divisions: Fruit and Flower. The following information for the past year is available for each division:

1-a. Compute each division’s return on investment (ROI) and residual income for last year. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))

2. Suppose Orange is investing in new technology that will increase each division’s operating income by $125,000. The total investment required is $2,000,000, which will be split evenly between the two divisions. Calculate the ROI and return on investment for each division after the investment is made. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))

3. Which manager will accept the investment.

P5.34 - Weighted average process costing: manufacturer Triangle zipper company accumulates costs for its single product using process costing. Direct material is added at the beginning of the production process, and conversion activity occurs uniformly throughout the process. A partially completed production report for May follows.

Required

1. Complete the following prices costing steps using the weighted average method:

a. Calculation of equivalent units

b. Calculation of unit costs

c. Analysis of total costs

2. Prepare a journal entry to record the transfer of the cost of goods completed and transferred during May.

1. Comparing Operating Characteristics Across Industries: Followings are selected income statement and balance sheet data companies in different industries.

a)   Compute the following ratios for each company:

b)   Comment on any differences among the companies’ gross profit-to-sale ratios and net income as a percentage of sales. Do differences in the companies’ business models explain the differences observed?

c)   Which company reports the highest ratio of net income to equity? Suggest one or more reasons for this result.

d)   Which company has financed itself with the highest percentage of liabilities to equity? Suggest one or more reasons for this result on such debt levels.

Premium Leather has been in the clothing market for the last 10 years and operates in an industry which is very competitive and volatile. The following information on Premium and its product portfolio is available – figures are per annum:

Leather is a major ingredient and regularly used in the production of all the products above. Leather used in production is bought from a supplier for $60 per meter. Fixed cost per annum is $2,300,000. The CFO of Premium has heard that break-even analysis could be used to assess the risks of the business and helps decision making. You are asked to help him in the analysis.

Required:

a. Calculate the contribution margin per unit for the 3 products.

b. Prepare a contribution margin income statement in thousands dollars.

c. Calculate the contribution margin ratio. Calculate, and briefly explain the significance of the break-even in dollar sales and margin of safety in percentage.

d. What is meant by the term operating leverage? Calculate the degree of operating leverage.

e. What is the percentage increase in sales in order to earn a target profit of $3 million, assume a constant sales mix?

f. Explain how the unavailability of leather and the rise in its price affect the profitability, risk and break-even point of Premium. Answer verbally.

g. In the coming month, the supplier can only supply 1,500 meters of the leather at a cost of $72 per meter to Premium which is not sufficient to meet the potential demand for the month. The potential demand in the coming month for the 3 products are as follows: bags – 800 units, belts – 1,000 units and shoes – 1,200 units. Compute the contribution margin per unit of the constraining resource and determine which products and the amount of the products Premium should produce to maximize its net operating income.

h. A foreign supplier approaches Premium to offer the leather at a substantial premium over the usual price. What is the highest price that Premium should be willing to pay? Explain.

Product Costs and Product Profitability Reports, using a Single Plantwide Factory Overhead Rate

Elliott Engines Inc. produces three products—pistons, valves, and cams—for the heavy equipment industry. Elliott Engines has a very simple production process and product line and uses a single plantwide factory overhead rate to allocate overhead to the three products. The factory overhead rate is based on direct labor hours. Information about the three products for 20Y2 is as follows:

The estimated direct labor rate is $32 per direct labor hour. Beginning and ending inventories are negligible and are, thus, assumed to be zero. The budgeted factory overhead for Elliott Engines is $168,000.

If required, round all per unit answers to the nearest cent.

a. Determine the plantwide factory overhead rate.
$ per dlh

b. Determine the factory overhead and direct labor cost per unit for each product.

c. Use the information above to construct a budgeted gross profit report by product line for the year ended December 31, 20Y2. Include the gross profit as a percent of sales in the last line of your report, rounded to one decimal place. Enter all amounts as positive numbers, except for a negative gross profit/gross profit percentage of sales.

d. What does the report in (c) indicate to you?

Valves have the   gross profit as a percent of sales. Valves may require a   price or   cost to manufacture in order to achieve the same profitability as the other two products.