Capital Budgeting Solution

Consolidated Company makes cardboard boxes. During the most recent accounting period Consolidated paid $60,000 for raw materials, $48,000 for labor, and $52,000 for overhead costs that were incurred to make boxes. Consolidated started and completed 400,000 boxes. Consolidated desires to earn a gross margin that is equal to 40% of product cost. Based on this information the selling price per box is:

12) Suppose a firm has $1500 in variable costs and $500 in fixed costs when it produces 500

Roy’s Restaurant has determined that if its revenues were to increase by 20 percent, then EBIT would increase by 45 percent to $87,000. The cash fixed costs for the business are $35,000. Given the same 20 percent increase in revenues, what would be the corresponding change in EBITDA?

Given your previous estimate from 1 and 2, estimate the total cost of driving the hybrid model for one year. Also estimate the total cost of driving the non-hybrid model for one year. Calculate the savings offered by the hybrid model over the non-hybrid model.

Annotated Bibliography: The Impact of Healthcare Reform on Capital Budgeting Carolann Stanek University of Mary Annotated Bibliography: The Impact of Healthcare Reform on Capital Budgeting Burt, J.C. & Voss, J.Z. (2012). Capital spending in the current healthcare environment. Health Capital, 5(4).

Whereas a sunk cost is an outlay that has been irrevocably incurred at some time in the past; sunk costs cannot be changed no matter what course of action is taken and are irrelevant for purposes of decision making involving the future. Sunk costs related to either remodeling of the store that would need to be taken into consideration include original costs of the current store (decorations, paint, shelves, displays, carpet) and designs that will need to be replaced or removed during either remodeling or closing.

d) Is the Internal Rate of Return (IRR) of the project greater than, equal to, or less than the cost of capital (discount rate)?

If I was going to prepare a capital expenditure budget request to add a retail pharmacy in the hospital my first choice of two individuals I want on my team is the manager over the hospital current pharmacy. They would have general knowledge based on the hospital patients what illnesses and medicines are common to deal with and give us a valuable perspective on costs, space and displays. In our text (Smith, 2014) " The manager of the hospital pharmacy can control the number of pharmacists and technicians employed relative to patient volume and technicians employed relative to patient volume and the expense for the management of the pharmacy. All of the factors I mentioned is important with establishing a capital expenditure budget. The other

___________________________________________________________________________ 1. A Ch3 Student: firm will maximize profit by producing that level of output at which A. the additional revenue from the last unit sold exceeds the additional cost of the last unit by the largest amount. B. the additional revenue from the last unit sold equals the additional cost of the last unit. C. total revenue exceeds total cost by the largest amount. D. total revenue equals total cost. E. both b

2. (a) What is the distinction between marginal cost and incremental cost? (b) How are sunk costs treated in managerial decision making? Why?

Top-down budgeting is described as “dominated by top members of the executive branch and the legislative branch. Decisions made by these top ranked actors include such matters as targets for programs or departments. Lower ranked decisions are sharply constrained by these top down decisions. Top-down budgeting may seek to prevent unwanted proposals” (Williams & Calabrese, 2011). Top-down budgeting is widely-used in the government, but also in many organizations (Ljungham). Organizationally, top-down budgeting decision makers are top level executives or senior leaders which determine the budget for lower levels of the organization. As stated, the method commonly goes beyond budgeting to include setting of

First, consider future value. Future value (FV) refers to the amount of money to which an investment will grow over a finite period of time at a given interest rate. Put another way, future value is the cash value of an investment at a particular time in the future. Start by considering the simplest case, a single-period investment.

For this piece of assignment, a cash budget will be made for Doomy Corporation for the second quarter of the year. For this budget, all the sales figures for the second quarter and some of the expenditure have been given. Hence, to prepare a cash budget, the sales figure given will be used and some calculations will be worked out in order to fully prepare an outstanding budget for Doomy Corporation the following information will be used efficiently.

In todays global market place every company or organization is looking for a way to get ahead of its competition. Every owner, CEO, or president is looking for away to keep his or her company or organization on solid financial ground. The one thing that they realize is, in order for a company or organization to stay solvent they will need to find away to stay competitive in this global market place. They have found that this may be done by some type of investment(s), in the form of acquisition, and or merger. In the world of business, capital budgeting is one of the most important steps that a company or organization can take. This process is called Capital budgeting. Capital budgeting is a process that attempts to determine the future. Before any large project begins, the capital budgeting process should be utilized. Without capital budgeting, your company could make a fatal mistake. A company or organization that is looking to invest its resources in a project without knowledge of the risks and returns involved could be seen as being reckless and irresponsible by its owners or shareholders. In the economic business world that we are currently in if a company or organization has no way of gauging the effectiveness of its investment most likely that the business will have little chance of surviving in a highly competitive marketplace (Clayman, Fridson, & Troughton, 2012).

Nchite and Nsana, (2004): Public Finance Management and Utilization Project- Report on strategies and Mechanisms of an effective system of public finances management in Zambia.