Acc206

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Final Paper Cindy D. McClay ACC: Principles of Accounting II (CBI1543A) Carolyn Woods 22 November 2015 FINAL PAPER As the controller of ABC Company, the CEO has come to me with a new opportunity that he’s been working on. The CEO would like to use the some of the shingle scrap materials to build cedar dollhouses. While this new product line would add additional raw materials and be more time-intensive to manufacture than the cedar shingles, this new product line will be able to leverage ABC’s existing manufacturing facilities as well as the current staff. Although this product line will require added expenses, it will provide additional revenue and gross profit to help reach the growth targets. The CEO is relying on me to help…show more content…
c. Considering the cash flow impact of the equipment as well as the time-value of money, would you recommend that ABC Company purchases the equipment? Why or why not? Project is viable of NPV of its cash flow is positive. In the given scenario, the cash flows of the project are positive over a period of time however, when cash flows are discounted at the discount rate of 12%, the overall NPV is negative $1,366, hence it is not advisable to undertake the project. Conclusion: The company is having quiet aggressive approach for the increase of sales. The company intends to increase the sales by 2.5 times which is quite high. The launch of new product is also quite risky as the company would require more labor, market knowledge about the product such as raw material, processing time of the product, etc. What would be the effect on the company if the product fails? The management needs to consider the above mentioned risk thoroughly. During the execution of a project, procedures for project control and record keeping become indispensable tools to managers and other participants in the construction process. These tools serve the dual purpose of recording the financial transactions that occur as well as giving managers an indication of the progress and problems associated with a project. Management accountant must synthesize a

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