#5. The following information was developed for Beta Company for the year ended December 31, 2018. Sales $1,000,000 $540,000 Variable Expenses Contribution Margin Fixed Expenses $460,000 $285,000 Net Income $175,000 Beta expected to sell 500,000 cans of fish food by the end of the year. The local conservation society asked Beta if they could supply 70,000 cans at $1 each. Beta's CEO would like to help out but he is concerned about the impact on the bottom line. He asks you to prepare an analysis using the contribution margin technique (Special order technique) and provide him your recommendation. This is within Beta's capacity to fill.

#5. The following information was developed for Beta Company for the year ended December 31, 2018. Sales $1,000,000 $540,000 Variable Expenses Contribution Margin Fixed Expenses $460,000 $285,000 Net Income $175,000 Beta expected to sell 500,000 cans of fish food by the end of the year. The local conservation society asked Beta if they could supply 70,000 cans at $1 each. Beta's CEO would like to help out but he is concerned about the impact on the bottom line. He asks you to prepare an analysis using the contribution margin technique (Special order technique) and provide him your recommendation. This is within Beta's capacity to fill.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 3PROB

See similar textbooks

Similar questions

New Style Corporation is a company that manufactures and sells chairs. On 1/1/20, the company purchases a piece of manufacturing equipment for $3,100,000 cash. The expected residual value is $200,000 and the useful life is 5 years. The company expects to produce 5,000,000 chairs with the equipment – 1,200,000 chairs in 2020; 1,400,000 chairs in 2021; 1,000,000 chairs in 2022; and 600,000 chairs 2023; and 800,000 chairs in 2024. Show your work. Round per unit to the nearest cent. Assume that New Style Corporation uses the Straight-Line method of depreciation.
In 2021 Terry Brady, the legendary athlete from Indiana, decided to leave his job as head football coach at Mattoon High School to open Brady Advantage, his own sporting goods store, in Terre Haute. By locating Brady Advantage halfway between St. Louis and Indianapolis, Brady hoped to attract customers from both large metropolitan markets. A partial income statement for Brady Advantage follows: 2021 Revenues Revenue from sales of goods and services........ $210,000 Operating costs and expenses: Cost of products and services sold.................... $82,000 Selling expenses.............................................. $6,000 Administrative expenses................................... $12,000 Total operating costs and expenses................ $100,000 Income from operations........................................ $110,000 Interest expense (bank loan)................................ $14,000…
he Schrödinger Science Store operates a retail store in a local shopping mall. The results of operations for the fourth quarter of 2020 are as follows: Sales $350,000 Less cost of sales 205,000 Gross margin 145,000 Less selling, general, and administrative expenses 50,000 Income before taxes 95,000 Less taxes on income 19,000 Net income $ 76,000 Additional information: Sales are expected to increase by 10 percent and cost of sales are expected to increase by 12 percent in each of the next two quarters. 75 percent of sales are collected in the quarter of sale, and 25 percent are collected in the quarter following sale. The balance in accounts receivable at the end of 2020 relates to sales in the fourth quarter of 2020. Inventory purchases in the fourth quarter of 2020 are $200,000. The balance in accounts payable at the end of 2020 relates to purchases in the fourth quarter of 2020. Inventory at the end of 2020 is $150,000. For 2021, the company plans to hold…
Comfort Corporation is a company that manufactures and sells chairs. On 1/1/21, the company purchases a piece of manufacturing equipment for $6,200,000 cash. The expected residual value is $400,000 and the useful life is 5 years. The company expects to produce 5,000,000 chairs with the equipment – 1,200,000 chairs in 2021; 1,400,000 chairs in 2022; 1,000,000 chairs in 2023; and 600,000 chairs 2024; and 800,000 chairs in 2025. Provide the 2020 adjusting journal entry (both accounts and amounts) that Newell Brands made to record depreciation on its Property and Equipment. Assume that Newell Brands makes one adjusting journal entry for depreciation expense at the end of each fiscal year as part of its adjusting entries.
Comfort Corporation is a company that manufactures and sells chairs. On 1/1/21, the company purchases a piece of manufacturing equipment for $6,200,000 cash. The expected residual value is $400,000 and the useful life is 5 years. The company expects to produce 5,000,000 chairs with the equipment – 1,200,000 chairs in 2021; 1,400,000 chairs in 2022; 1,000,000 chairs in 2023; and 600,000 chairs 2024; and 800,000 chairs in 2025. SHOW YOUR WORK! Round per unit to the nearest cent. Assume that Comfort Corporation uses the Straight-Line method of depreciation. 2021 2022 2023 2024 2025 Depreciation Expense for the year Accumulated Depreciation at year-end PPE, Net on year-end Balance Sheet Assume that Comfort Corporation uses the Units-of-Activity method of depreciation. 2021 2022 2023 2024 2025 Depreciation Expense for the year…
Comfort Corporation is a company that manufactures and sells chairs. On 1/1/21, the company purchases a piece of manufacturing equipment for $6,200,000 cash. The expected residual value is $400,000 and the useful life is 5 years. The company expects to produce 5,000,000 chairs with the equipment – 1,200,000 chairs in 2021; 1,400,000 chairs in 2022; 1,000,000 chairs in 2023; and 600,000 chairs 2024; and 800,000 chairs in 2025. Round per unit to the nearest cent. Assume that Comfort Corporation uses the Straight-Line method of depreciation. 2021 2022 2023 2024 2025 Depreciation Expense for the year Accumulated Depreciation at year-end PPE, Net on year-end Balance Sheet Assume that Comfort Corporation uses the Units-of-Activity method of depreciation. 2021 2022 2023 2024 2025 Depreciation Expense for the year Accumulated…
A business is considering purchasing a piece of new equipment for $200,000. The equipment will generate the following revenues: Year 1: $50,000Year 2: $50,000Year 3: $50,000Year 4: $60,000The machine can be sold at the end of the year four for $25,000. Assume a discount of 8%. 3. Based on your above calculations, should they purchase the new piece of equipment? Why?
The following is cost information for the Creamy Crisp Donut Company:Entrepreneur's potential earnings as a salaried worker = $50,000Annual lease on building = $22,000Annual revenue from operations = $380,000Payments to workers = $120,000Utilities (electricity, water, disposal) costs = $8,000Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the above data. If, other things equal, Creamy Crisp's revenue fell to $286,000: its implicit costs, including a normal profit, would exceed its explicit costs.B. it would earn a normal profit but not an economic profit.C. it would suffer an economic loss.D. its accounting profit would fall to zero.
The following is cost information for the Creamy Crisp Donut Company:Entrepreneur's potential earnings as a salaried worker = $50,000Annual lease on building = $22,000Annual revenue from operations = $380,000Payments to workers = $120,000Utilities (electricity, water, disposal) costs = $8,000Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the above data. Creamy Crisp's implicit costs, including a normal profit are: $136,000.B. $150,000.C. $94,000.D. $156,000.
Oriole provides enivronmentally friendll laswn services for homeownders. Its operating costs are as follows: depreciation (straight-line) $1500 per month advertising $400 per month insurance $3560 per month weed and feed materials $24 per lawn dircet labor $3 per lawn fuel $1 per lawn Oriole charges $80 per treatment for the average single family lawn. For the month ended July 31, 2022, the company had total sales of $9600. Prepare a CVP Income statement for the month ended July 31,2022.
Thorne Co. values, advertises and sells residential property on behalf of its customers. Thecompany has been in business for only a short time and is preparing a cash budget for the first four months of 2013. Expected sales of residential properties are as follows.2012 2013 2013 2013 2013Month December January February March AprilUnits sold 10 10 15 25 30The average price of each property is £180 000 and Thorne Co. charges a fee of 3 per cent of the value of each property sold. Thorne Co. receives 1 per cent in the month of sale and the remaining 2 per cent in the month after sale. The company has nine employees who are paid on a monthly basis. The average salary per employee is£35 000 per year. If more than 20 properties are sold in a given month, each employee is paid in that month a bonus of £140 foreach additional property sold.Variable expenses are incurred at the rate of 0.5 per cent of the value of each property sold and these expenses are paid in the month of sale. Fixed…
Thorne Estates Limited advertises and sells residential property on behalf of its customers. The company has been in business for only a short time and is preparing a cash budget for first four months of 2021. Expected sales of residential properties are as follows:2020 2021 2021 2021 2021Month Dec Jan Feb Mar AprUnits Sold 10 10 15 25 30 The average price of each property is £180,000 and Thorne Estates charges a fee of 3% of the value of each property sold. Thorne Estates receives a 1% in the month of sale and the remaining 2% in the month after sale.The company has nine employees who are paid on a monthly basis. The average salary per employee is £35,000 per year. If more than 20 properties are sold in a given month, each employee is paid in that month a bonus of £140 for each additional property sold.Variable expenses are incurred at the rate of 0.5% of the value of each property sold and these expenses are paid in the month of sale. Fixed overheads of £4,300 per month are paid in…