[The following information applies to the questions displayed below.]
O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:
| Variable costs per unit: | ||
| Manufacturing: | ||
| Direct materials | $ | 29 |
| Direct labor | $ | 16 |
| Variable manufacturing overhead | $ | 3 |
| Variable selling and administrative | $ | 2 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 580,000 |
| Fixed selling and administrative expenses | $ | 150,000 |
During its first year of operations, O’Brien produced 95,000 units and sold 71,000 units. During its second year of operations, it produced 83,000 units and sold 102,000 units. In its third year, O’Brien produced 85,000 units and sold 80,000 units. The selling price of the company’s product is $71 per unit.
4. Assume the company uses absorption costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold first):
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3.
In: Accounting
The Carbondale Hospital is considering the purchase of a new ambulance. The decision will rest partly on the anticipated mileage to be driven next year. The miles driven during the past 5 years are as follows:
|
Year |
1 |
2 |
3 |
4 |
5 |
|
Mileage |
3,050 |
4,050 |
3,450 |
3,750 |
3,750 |
a)Using a 2-year moving average, the
forecast for year 6 (round your response to the nearest whole
number)?.
b) If a 2-year moving average is used to make the
forecast, the MAD based on this (round your response to one decimal
place). (Hint: You will have only 3 years of matched
data.)?
c)The forecast for year 6 using a weighted
2-year moving average with weights of 0.40 and 0.60 (the weight of
0.60 is for the most recent period) = miles (round your response to
the nearest whole number).?
The MAD for the forecast developed using a weighted 2-year moving
average with weights of 0.40 and 0.60 (round your response to one
decimal place). (Hint: You will have only 3 years of matched
data.)?
d) Using exponential smoothing with alpha ? 0.30 and the forecast for year 1 being 3,050, the forecast for year 6 (round your response to the nearest whole number).?
In: Finance
[The following information applies to the questions displayed below.] O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 29 Direct labor $ 18 Variable manufacturing overhead $ 4 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 560,000 Fixed selling and administrative expenses $ 180,000 During its first year of operations, O’Brien produced 96,000 units and sold 77,000 units. During its second year of operations, it produced 82,000 units and sold 96,000 units. In its third year, O’Brien produced 87,000 units and sold 82,000 units. The selling price of the company’s product is $74 per unit. 3. Assume the company uses absorption costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first): a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3.
In: Accounting
Required information
[The following information applies to the questions displayed below.]
Inner Secret T Shirt Company produces and sells one product. The following information pertains to each of the company’s first three years of operations:
| Variable costs per unit: | ||
| Manufacturing: | ||
| Direct materials | $ | 27 |
| Direct labor | $ | 15 |
| Variable manufacturing overhead | $ | 5 |
| Variable selling and administrative | $ | 3 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 600,000 |
| Fixed selling and administrative expenses | $ | 170,000 |
During its first year of operations, O’Brien produced 97,000 units and sold 73,000 units. During its second year of operations, it produced 79,000 units and sold 98,000 units. In its third year, O’Brien produced 89,000 units and sold 84,000 units. The selling price of the company’s product is $73 per unit.
Required:
1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first):
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3.
In: Accounting
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,110,000, and it would cost another $23,000 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $542,000. The machine would require an increase in net working capital (inventory) of $13,500. The sprayer would not change revenues, but it is expected to save the firm $389,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 40%.
What is the Year 0 net cash flow?
What are the net operating cash flows in Year 1, Year 2, and Year 3? Do not round intermediate calculations. Round your answers to the nearest dollar.
Year 1 $ =
Year 2 $ =
Year 3 $ =
What is the additional Year 3 cash flow (i.e, the after-tax salvage and the return of working capital)? Do not round intermediate calculations. Round your answer to the nearest dollar.
$ =
If the project's cost of capital is 10 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar.
NPV =
Should the machine be purchased?
In: Finance
11.
O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:
| Variable costs per unit: | ||
| Manufacturing: | ||
| Direct materials | $ | 26 |
| Direct labor | $ | 15 |
| Variable manufacturing overhead | $ | 3 |
| Variable selling and administrative | $ | 4 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 560,000 |
| Fixed selling and administrative expenses | $ | 190,000 |
During its first year of operations, O’Brien produced 91,000 units and sold 76,000 units. During its second year of operations, it produced 81,000 units and sold 91,000 units. In its third year, O’Brien produced 85,000 units and sold 80,000 units. The selling price of the company’s product is $75 per unit.
Case 6-29 Part-1
Required:
1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first):
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3.
In: Accounting
Periodic Inventory System and Inventory Costing Methods During its first year of operation, Lux Company purchased 5,600 units of a product at $42 per unit. During the second year, it purchased 6,000 units of the same product at $48 per unit. During the third year, it purchased 5,000 units at $60 per unit. Lux managed to have an ending inventory each year of 1,000 units. The company uses the periodic inventory system. Prepare cost of goods sold statements that compare the value of ending inventory and the cost of goods sold for each of the three years using the FIFO inventory costing method. If an amount is zero, enter "0". Year 1 Year 2 Year 3 Beginning inventory: $ $ $ Purchases: $ $ $ Cost of goods available for sale: $ $ $ Ending inventory: $ $ $ Cost of goods sold: $ $ $ Prepare cost of goods sold statements that compare the value of ending inventory and the cost of goods sold for each of the three years using the LIFO method. If an amount is zero, enter "0". Year 1 Year 2 Year 3 Beginning inventory: $ $ $ Purchases: $ $ $ Cost of goods available for sale: $ $ $ Ending inventory: $ $ $ Cost of goods sold: $ $ $
In: Accounting
|
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.97 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,170,000 in annual sales, with costs of $847,000. The project requires an initial investment in net working capital of $390,000, and the fixed asset will have a market value of $255,000 at the end of the project. |
| If the tax rate is 35 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? (MACRS schedule) (Enter your answers in dollars, not millions of dollars, e.g. 1,234,567. Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places, e.g., 32.16.) |
| Years | Cash Flow |
| Year 0 | $ |
| Year 1 | $ |
| Year 2 | $ |
| Year 3 | $ |
|
If the required return is 9 percent, what is the project's NPV? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567. Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) |
| NPV | $ |
PLEASE SHOW WORK, NO EXCEL PLEASE
In: Finance
Ratio of Liabilities to Stockholders' Equity and Number of Times Interest Earned
The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years:
| Current Year | Previous Year | |||
| Accounts payable | $982,000 | $229,000 | ||
| Current maturities of serial bonds payable | 580,000 | 580,000 | ||
| Serial bonds payable, 10% | 2,310,000 | 2,890,000 | ||
| Common stock, $1 par value | 100,000 | 120,000 | ||
| Paid-in capital in excess of par | 1,060,000 | 1,070,000 | ||
| Retained earnings | 3,680,000 | 2,920,000 | ||
The income before income tax was $809,200 and $708,100 for the current and previous years, respectively.
a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round to one decimal place.
| Current year | |
| Previous year |
b. Determine the times interest earned ratio for both years. Round to one decimal place.
| Current year | |
| Previous year |
c. The ratio of liabilities to stockholders' equity has improved and the number of times bond interest charges were earned has improved from the previous year. These results are the combined result of a larger income before income taxes and lower interest expense in the current year compared to the previous year.
In: Accounting
Phillip and Case are in the process of forming a partnership to import Belgian chocolates, to which Phillip will contribute one-third time and Case full time. They have discussed the following alternative plans for sharing profit and losses. a. In the ratio of their initial investments, which they have agreed will be $164,000 for Phillip and $246,000 for Case. b. In proportion to the time devoted to the business. c. A salary allowance of $4,000 per month to Case and the balance in accordance with their initial investment ratio. d. A $4,000 per month salary allowance to Case, 10% interest on their initial investments, and the balance equally. The partners expect the business to generate profit as follows: Year 1, $101,000 loss; Year 2, $151,000 profit; and Year 3, $251,000 profit. Required: Complete a schedule for each of the four plans being considered by showing how the partnership profit or loss for each year would be allocated to the partners. (Enter all amounts as positive value. Round the final answer to the nearest whole dollar.)
Plan a
:year 1 calculations share to philp share to case total plan
year 2
year 3
plan B
year 1 calculations share to philp share to case total plan
year 2
year 3
In: Accounting