Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products and processes which it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells a patent. The history of Fields patent number 758-6002-1A is as follows.

Based on execution of a royalty contract in March 2007, the patent is deemed to be economically viable. Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2009, it revised its useful life estimate downward to 5 remaining years. Amortization is computed for a full year if the cost is incurred prior to July 1, and no amortization for the year if the cost is incurred after June 30. The company’s year ends December 31.

1. The carrying value of patent No. 758-6002-1A on December 31, 2004? ________
2. The carrying value of patent No. 758-6002-1A on December 31, 2008? ________
3. The carrying value of patent No. 758-6002-1A on December 31, 2011? ________

Northwood Company manufactures basketballs. The company has a ball that sells for $23. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable costs are high, totaling $15 per ball, of which 65% is direct labor cost.

Last year, the company sold 30,000 of these balls, with the following results:                

5. Refer to the data in (point 4) above. If the expected change in variable costs takes place, how many balls will have to be sold next year to earn the same net operating income $90,000 as last year?

6. Refer again to the data in (point 4) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year, what selling price per ball must it charge next year to cover the increased labor costs?

7. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable costs per ball by 40%, but it would cause fixed costs per year to double. If the new plant is built, what would be the company’s new CM ratio and new break-even point in balls?

8. Refer to the original data. Find the multi-product breakeven point, if the company decides to produce another types of balls (of higher quality) it is expected that the sell at a price of $40 of which 60% is variable cost and no more fixed cost is required. If the company is expecting to have sales at a value of 890,000 of which this new balls would be about 20% of the total sales value. All information related to the original types of balls remains the same.

Kingston Kiteboards Incorporated (KKI) has been experiencing very strong demand for its products as kite-boarding continues to take away market share from windsurfing. The company is considering a new facility to manufacture an improved line of kites and another facility to produce a new line of boards. The company estimates that the new kite facility will cost $1,250,000 to construct in Year 0 with a salvage value of $150,000 in Year 12. The board manufacturing facility will cost $1,500,000 in Year 0 with a salvage value of $200,000 in Year 12. Combined annual revenue for the new kites and boards is expected to be $800,000 with annual combined operating costs of $300,000 each year. Management has identified a piece of land where both facilities could be built that could be purchased for $500,000 in Year 0. The management team estimates that the land may be sold for the same value of $500,000 at the end of Year 12. The company uses a discount rate of 10% and a tax rate of only 15%. Assume that the CCA rate of 20% can be applied to the land and the manufacturing facilities.

a.  Use the present value tax shield approach to determine the net present value (NPV) of combined project involving both new manufacturing facilities. Should KKI proceed with the investment using these assumptions?

b.  The management team at KKI has decided to take a more conservative approach with some of its estimates. The team feels that the facilities may only last for 10 years and the operating costs may amount to $375,000 per year. However, the company has successfully negotiated a construction cost of $1,000,000 for the kite facility and $1,200,000 for the board facility. (Assume the salvage values are unchanged.) Using the present value tax shield approach, what is the total NPV with these assumptions? Should the company proceed under these revised assumptions?

Please show all steps without using excel

Kingston Kiteboards Incorporated (KKI) has been experiencing very strong demand for its products as kite-boarding continues to take away market share from windsurfing. The company is considering a new facility to manufacture an improved line of kites and another facility to produce a new line of boards. The company estimates that the new kite facility will cost $1,350,000 to construct in Year 0 with a salvage value of $160,000 in Year 15. The board manufacturing facility will cost $1,700,000 in Year 0 with a salvage value of $180,000 in Year 15. Combined annual revenue for the new kites and boards is expected to be $750,000 with annual combined operating costs of $270,000 each year. Management has identified a piece of land where both facilities could be built that could be purchased for $550,000 in Year 0. The management team estimates that the land may be sold for the same value of $550,000 at the end of Year 15. The company uses a discount rate of 9% and a tax rate of 30%. Assume that the CCA rate of 20% can be applied to the land and the manufacturing facilities

a. Use the present value tax shield approach to determine the NPV of combined project involving both new manufacturing facilities. Should KKI proceed with the investment using these assumptions?

b. The management team at KKI has decided to take a more conservative approach with some of its estimates. The team feels that the facilities may only last for 13 years and the operating costs may amount to $300,000 per year. However, the company has successfully negotiated a construction cost of $1,200,000 for the kite facility and $1,400,000 for the board facility. (Assume the salvage values are unchanged.) Using the present value tax shield approach, what is the total NPV with these assumptions? Should the company proceed under these revised assumptions?

The following transactions took place in the town of Burchette during 20X3: 1. A bond issue of $12,000,000 was authorized for the construction of a library, and the estimated bond proceeds and related appropriations were recorded in the General Ledger accounts of a new Capital Projects Fund. 2. The bonds were sold at a premium of $90,000. 3.The cost of issuing the bonds, $80,000, was paid. 4. An order was placed for material estimated to cost $6,500,000. 5. Salaries and wages of $500,000 were paid. 6. The premium, net bond of issuance costs, was transferred to a Debt Service Fund. The following transactions took place in 20X4: 7. The materials were received, the actual cost was $6,585,000. 8. Salaries and wages of $4,010,000 were paid. 9. All outstanding bills were paid. 10. The project was completed. The accounts were closed, and the remaining balance was transferred to a Debt Service Fund. a. Prepare all journal entries (budgetary and actual), including closing entries, to record the Capital Projects Fund transfers for 20X3 and 20X4. b. Prepare a Capital Projects Fund balance sheet as of December 31, 20X3. c. Prepare a Capital Projects Fund Statement of Revenues, Expenditures, and Changes in Fund Balance for the project, including (1) the year ended December 31, 20X3, and (2) a separate budgetary combined comparison statement for the years ended December 31 20X3 and 20X4.

Can anybody help with the closing entries for both 20x3 and 20x4? I see different answers and could you an explanation, especially on the fund balance/appropriations entry for 20x3. One post showed an entry to fund balance debit $5 mil and credit appropriations $5 mil. When a comment was posted the response was I don't know, just the answer I was given.

Use a combined cost index and the power-sizing cost estimating model to estimate the current cost of a piece of equipment that has 50% more capacity than a similar piece of equipment that cost $30,000 five years ago. The appropriate power-sizing exponent for this type of equipment is 0.8, and the ratio of the cost indexes (current to 5 years ago) is 1.24. (Note that this is more complex than the previous questions.)

A) $55,800

B) $44,640

C) $29,760

D) $51,454

What are cost objects, cost pools and allocation bases? What role do they play in cost allocation? What is the difference between cost allocation bases and cost drivers?

a) Complete the following cost schedule by computing average fixed cost and average variable cost.

Instructions: Enter your responses rounded to the nearest whole number.

What is a component of transportation cost?

A. Handling cost.

B. Lot quality cost.

C. Insurance cost.

D. Production cost.