They are interested in remodeling an existing vacant store at initial cost (t=0) of $95,000 and then paying $8,000 per year in rent and $38,000 in other annual expenses. Cash inflows are expected at $78,000 per year over the next five years. All Cash Flows except the $95,000 occur at the end of each year. Given a required return of 8.6% per year, is this a good deal?
No, the Net Present Value (NPV) is negative. Yes, the Net Present Value (NPV) is $27,771. Yes, the Net Present Value (NPV) is $30,771. No, the Discounted Payback Period is less than five years.
In: Finance
What is the "Cost of Poor Quality", and what role does it play in the company-wide assessment of quality?
In: Operations Management
1.
With the information for the first four months of production, determine the variable cost per unit and the fixed
cost using the high-low method.
Total Cost
Units Produced
January
$155,100
9,000
February
166,350
9,750
March
158,100
9,200
April
157,350
9,150
2.
For 20Y5, Moore’s Mowers had total sales of $42,000, with each product selling for $15 each. Each product had
variable costs of $8. Calculate the (a) contribution margin, (b) contribution margin ratio, and (c) unit contribution
margin. Round contribution margin ratio to the nearest percent.
3.
Use the following information to determine the change in income from operations for each situation if the
company sells its products for $4 each.
a.
Contribution margin ratio of 35% and a 10,000 increase in sales units.
b.
Unit contribution margin of $2.10 and an increase of $20,000 in sales.
c.
Contribution margin ratio of 30% and an increase in sales of $30,000.
4.
During 20Y5, Jackson Computer Supply produced income from operations of $95,000 from sales of 80,000 units at
$2.50 each. The company’s fixed costs totaled $22,000. If the company has a 4,000 increase in sales units in the
upcoming year, what will income from operations be for 20Y6? Assume that fixed costs and the selling price and
variable cost per unit will remain the same.
In: Accounting
Edwards Construction currently has debt outstanding with a market value of $82,500 and a cost of 7 percent. The company has EBIT of $5,775 that is expected to continue in perpetuity. Assume there are no taxes.
a-1. What is the value of the company's equity? (Do not round intermediate calculations. Leave no cell blank - be certain to enter "0" wherever required.) Calculate Value of equity
a-2. What is the debt-to-value ratio? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Calculate Debt-to-value ratio
b. What are the equity value and debt-to-value ratio if the company's growth rate is 3 percent? (Do not round intermediate calculations and round your "Debt-to-value" answer to 3 decimal places, e.g., 32.161.) Equity value $ Debt-to-value
c. What are the equity value and debt-to-value ratio if the company's growth rate is 5 percent? (Do not round intermediate calculations and round your "Debt-to-value" answer to 3 decimal places, e.g., 32.161.) Calculate Equity value $ Debt-to-value
In: Finance
Describe standard costs. Explain the benefits of using a standard cost system at Apple.
In: Accounting
Assume that the mean hourly cost to operate a commercial airplane follows the normal distribution with a mean of $1660 per hour and a standard deviation of $190.
What is the maximum operating cost for the lowest 2% of the airplanes? (Round z-score computation to 2 decimal places and the final answer to 1 decimal place.)
Maximum operating cost $
In: Statistics and Probability
Statement of Cost of Goods Manufactured and Income Statement for a Manufacturing Company
The following information is available for Shanika Company for 20Y6:
| Inventories | January 1 | December 31 | ||
| Materials | $330,810 | $410,200 | ||
| Work in process | 595,460 | 557,870 | ||
| Finished goods | 572,300 | 570,180 | ||
| Advertising expense | $278,530 |
| Depreciation expense-office equipment | 39,380 |
| Depreciation expense-factory equipment | 52,920 |
| Direct labor | 631,710 |
| Heat, light, and power-factory | 20,920 |
| Indirect labor | 73,840 |
| Materials purchased | 619,400 |
| Office salaries expense | 216,180 |
| Property taxes-factory | 17,230 |
| Property taxes-headquarters building | 35,690 |
| Rent expense-factory | 29,120 |
| Sales | 2,900,110 |
| Sales salaries expense | 356,050 |
| Supplies-factory | 14,360 |
| Miscellaneous costs-factory | 9,020 |
Required:
1. Prepare the 20Y6 statement of cost of goods manufactured.
| Shanika Company | |||
| Statement of Cost of Goods Manufactured | |||
| For the Year Ended December 31, 20Y6 | |||
| $ | |||
| Direct materials: | |||
| $ | |||
| $ | |||
| $ | |||
| Factory overhead: | |||
| $ | |||
| Total factory overhead | |||
| Total manufacturing costs incurred in 20Y6 | |||
| Total manufacturing costs | $ | ||
| Cost of goods manufactured | $ | ||
2. Prepare the 20Y6 income statement.
| Shanika Company | |||
| Income Statement | |||
| For the Year Ended December 31, 20Y6 | |||
| $ | |||
| Cost of good sold: | |||
| $ | |||
| $ | |||
| $ | |||
| Operating expenses: | |||
| Administrative expenses: | |||
| $ | |||
| $ | |||
| Selling expenses: | |||
| $ | |||
| Total operating expenses | |||
| $ | |||
In: Accounting
In the manufacturing sector, if the indirect cost amount is large enough, an incorrect allocation base could have serious repercussions. What might be some examples of the effects of an incorrect allocation? How might that affect a company’s profitability and decision-making?
In: Accounting
Statement of Cost of Goods Manufactured and Income Statement for a Manufacturing Company
The following information is available for Shanika Company for 20Y6:
| Inventories | January 1 | December 31 |
| Materials | $346,490 | $436,580 |
| Work in process | 623,680 | 593,750 |
| Finished goods | 599,430 | 606,850 |
| Advertising expense | $296,440 | |
| Depreciation expense-office equipment | 41,910 | |
| Depreciation expense-factory equipment | 56,320 | |
| Direct labor | 672,330 | |
| Heat, light, and power-factory | 22,270 | |
| Indirect labor | 78,580 | |
| Materials purchased | 659,240 | |
| Office salaries expense | 230,080 | |
| Property taxes-factory | 18,340 | |
| Property taxes-headquarters building | 37,980 | |
| Rent expense-factory | 31,000 | |
| Sales | 3,086,620 | |
| Sales salaries expense | 378,950 | |
| Supplies-factory | 15,280 | |
| Miscellaneous costs-factory | 9,600 |
Required:
1. Prepare the statement of cost of goods manufactured.
| Shanika Company | |||
| Statement of Cost of Goods Manufactured | |||
| For the Year Ended December 31, 20Y6 | |||
| $ | |||
| Direct materials: | |||
| $ | |||
| $ | |||
| $ | |||
| Factory overhead: | |||
| $ | |||
| Total factory overhead | |||
| Total manufacturing costs incurred | |||
| Total manufacturing costs | $ | ||
| Cost of goods manufactured | $ | ||
2. Prepare the income statement.
| Shanika Company | |||
| Income Statement | |||
| For the Year Ended December 31, 20Y6 | |||
| $ | |||
| Cost of goods sold: | |||
| $ | |||
| $ | |||
| $ | |||
| Operating expenses: | |||
| Administrative expenses: | |||
| $ | |||
| $ | |||
| Selling expenses: | |||
| $ | |||
| Total operating expenses | |||
| $ | |||
In: Accounting
In: Economics