Chapter 12 Sample Problem and Solution

SUBJECT = COST ACCOUNT Seattle Grace Hospital plans to invest in a new piece of CT imaging equipment. The hospital estimates that it can bill $1,500 per scan. Preliminary market assessments indicate that demand will be fewer than 5,000 scans per year. The hospital is considering a scanner (scanner A) that will result in total fixed costs of $1 million per year and would yield a profit of $500,000 if the hospital producedand billed for 5,000 scans. What is the implied variable cost rate (variable cost per scan) for scanner A? a. $1,500 b. $300 c. $1,200 d. $200 e. $100

The management of Brawn Engineering is considering three alternatives to satisfy an OSHA requirement for safety gates in the machine shop. Each gate will completely satisfy the requirement, so no combinations need to be considered. The first costs, operating costs, and salvage values over a 5-year planning horizon are shown below. Using a future worth analysis with a MARR of 20%/year, determine the preferred gate.

A distribution center wants to evaluate an alternative product tracking system. The system has an initial cost of $500,000 and a useful life of 7 years. The operating cost is estimated to be $550 per metric ton of product moved per day. The center can handle between 30 and 50 tons per day. Analyze the sensitivity of the PW to changes in a 10-metric-ton increment of product moved. Use an interest rate of 3% per year and 200 days of work per year. Find the PW of 3 options.

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9. Calculating Profitability Index Bill pians to open a self-serve grooming center in a storefront. The grooming equipment will cost $187,000. Bill expects aftertax cash inflows of $62,000 annually for seven years, after which he plans to scrap the equipment and retire to the beaches of Nevis, The first cash inflow ocurs at the end of the first year. Assume the required return is 15 percent. What is the project's PI? Should it be accepted?

You have been asked to perform a sensitivity analysis on a company’s plan to modernize its facilities to determine the impact of possible errors in estimating the net annual savings. The initial investment in the modernization is $30,000. The expected net annual savings are $13,000. The salvage value is $7,000 after a planning horizon of 7 years. MARR is 12% per year. Solve, a. Determine if the modernization is economically attractive based on the initial estimates and an annual worth (AW) analysis. b. Determine the AW if the net annual savings change by the following percentages from the initial estimate: −80%, −60%, −40%, −20%, +20%, +40%. c. Determine the percentage change in net annual savings that causes a reversal in the decision regarding the attractiveness of the project.

Accounting

What is the implied variable cost rate for scanner A on these general accounting question?

Can you please answer the general accounting question?

Please do not give solution in image format thanku

Steel insulators is analyzing solution general accounting question

Risk and probability Micro-Pub, Inc., is considering the purchase of one of two microfilm cameras, R and S. Both should provide benefits over a 10-year period, and each requires an initial investment of $2,000. Management has constructed the following table of estimates of rates of return and probabilities for pessimistic, most likely, and optimistic results: a. Determine the range for the rate of return for each of the two cameras. b. Determine the value of the expected return for each camera. c. Which camera purchase is riskier? Why? a. The range for the rate of return for camera R is %. (Round to the nearest whole number.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Initial investment Annual rate of return Pessimistic Most likely Optimistic Camera R Amount $2,000 15% 29% 31% C 0.29 0.51 0.20 Probability Amount 1.00 $2,000 Camera S 21% 26% 30% Probability 1.00 0.18 0.54 0.28 - X

Project Evaluation: Kolby's Korndogs is looking at a new sausage system with an installed cost of $655,000. The cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage stystem can be scrapped for $85,000. The sausage system will save the firm $183,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $35,000. If the tax rate is 22 percent and the discount rate is 8 percent, what is the NPV of this project?  Can the calculator and excel solution be provided?

please answer both requirements

Solve the problem

The management of Penfold Corporation is considering the purchase of a machine that would cost $310,000, would last for 6 years, and would have no salvage value. The machine would reduce labor and other costs by $60,000 per year. The company requires a minimum pretax return of 12% on all investment projects. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the proposed project is closest to (Ignore income taxes.): (Round your intermediate calculations and final answer to the nearest whole dollar amount.)