A MAN MANAGEMENT OF AN INDUSTRIAL COMPANY WANTS TO BE SURE ON THEIR DECISION OF BUILDING A NEW PLANT IN TWODIFFERENT ALTERNATIVE LOCATIONS WITH COST PARAMETERS AS FOLLOWS:COST ITEMSLOCATION 1LOCATION 2PLANT COSTP2,250,000.00P100,000.00P2,000,000.00P120,000.00LABOR/YEAROVERHEAD/YEARP55,000.003% OF FIRST COSTP40,000.005% OF FIRST COST20%TAXES AND INSURANCEWORTH OF MONEY20%CAPITAL RECOVERY10 ΥEARS10 YEARSIF THE COST OF RAW MATERIALS IS THE SAME FOR BOTH PLANT, WHICH LOẠCTION IS BETTER, USING ANNUAL WORTHMETHOD? WHY?

Answered: Image /qna-images/answer/1747bbeb-71b4-4b6f-9fbe-2a3839d307f5.jpg

Answered: A MAN MANAGEMENT OF AN INDUSTRIAL…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 1SEQ: Mario Company is considering discontinuing a product. The costs of the product consist of $20,000...

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Thaler Company bought 26,000 of raw materials a year ago in anticipation of producing 5,000 units of a deluxe version of its product to be priced at 75 each. Now the price of the deluxe version has dropped to 35 each, and Thaler is now deciding whether to produce 1,500 units of the deluxe version at a cost of 48,000 or to scrap the project. What is the opportunity cost of this decision? a. 175,000 b. 375,000 c. 48,000 d. 26,000
Cost Behavior, Classification Smith Concrete Company owns enough ready-mix trucks to deliver up to 100,000 cubic yards of concrete per year (considering each trucks capacity, weather, and distance to each job). Total truck depreciation is 200,000 per year. Raw materials (cement, gravel, and so on) cost about 25 per cubic yard of cement. Required: 1. Prepare a graph for truck depreciation. Use the vertical axis for depreciation cost and the horizontal axis for cubic yards of cement. 2. Prepare a graph for raw materials. Use the vertical axis for cost and the horizontal axis for cubic yards of cement. 3. Assume that the normal operating range for the company is 90,000 to 96,000 cubic yards per year. Classify truck depreciation and raw materials as variable or fixed costs. 4. CONCEPTUAL CONNECTION Briefly describe actions that Smith management could take to reduce the truck depreciation cost from year to year. 5. CONCEPTUAL CONNECTION Briefly describe actions that Smith management could take to reduce the total raw materials cost from year to year.
The production of a new product required Zion Manufacturing Co. to lease additional plant facilities. Based on studies, the following data have been made available: Estimated annual sales24,000 units Selling expenses are expected to be 5% of sales, and net income is to amount to 2.00 per unit. Required: 1. Calculate the selling price per unit. (Hint: Let X equal the selling price and express selling expense as a percentage of X.) 2. Prepare an absorption costing income statement for the year ended December 31, 2016. 3. Calculate the break-even point expressed in dollars and in units, assuming that administrative expense and factory overhead are all fixed but other costs are fully variable.
Dixon Construction Materials has collected this information: Based on this Information, what is the EVA for the project? A. $100,000 B. $10,000 C. $450,000 D. ($110,000)
Mario Company is considering discontinuing a product. The costs of the product consist of $20,000 fixed costs and $15,000 variable costs. The variable operating expenses related to the product total $4,000. What is the differential cost? A. $19,000 B. $15,000 C. $35,000 D. $39,000
‏A firm is considering three mutually exclusive alternatives as part of a production improvement program . The alternatives are : Alternative A ( i = 12 % ) B ( i = 10 % ) C ( i = 15 % ) Installation Cost ( U ) 200,000 270,000 190,000 Uniform Annual 30,750 40,500 30,250 Benefit ( U ) Useful life in years 12 15 14 Which of the above should be chosen
A company with a MARR of 15% must install one of two production machines, X or Y. Machine X has an initial cost of $40,000 with an annual operating and maintenance (O&M) cost of $30,000 and a salvage value of $5,000 after its 5-year life. It will generate an annual benefit of $150,000. Machine Y’s benefits and costs differ from machine X’s. Hint: NPW = PW (benefits) − PW (costs) Group of answer choices NPW = [$150,000(P/A, 15%, 5)] + [$40,000 + $30,000(P/A, 15%, 5) + $5,000(P/F, 15%, 5)] NPW = [$150,000(P/A, 15%, 5)] − [$40,000 + $30,000(P/A, 15%, 5) − $5,000(P/F, 15%, 5)] NPW = [$150,000(P/A, 15%, 5)] − [$40,000 + $30,000(P/A, 15%, 5) + $5,000(P/F, 15%, 5)] NPW = [$150,000(P/A, 15%, 5)] − [$40,000 − $30,000(P/A, 15%, 5) + $5,000(P/F, 15%, 5)]
Mowbot's management is evaluating new proposals for production machines from three companies: Brawn Up front cost Annual cost saving Life (years) $ $ Apex (150,000) $ 63,000 $ 4 (200,000) $ 81,000 $ Cameo (250,000)102,000 4 4 Use incremental present worth analysis to decide which alternative should be recommended. MARR is 18%.
The directors of Pelta Co are considering a planned investment project costing $25m, payableat the start of the first year of operation. The following information relates to the investmentproject:Year 1 Year 2 Year 3 Year 4Sales volume (units/year) 520,000 624,000 717,000 788,000Selling price ($/unit) 30·00 30·00 30·00 30·00Variable costs ($/unit) 10·00 10·20 10·61 10·93Fixed costs ($/year) 700,000 735,000 779,000 841,000This information needs adjusting to take account of selling price inflation of 4% per year andvariable cost inflation of 3% per year. The fixed costs, which are incremental and related to theinvestment project, are in nominal terms. The year 4 sales volume is expected to continue forthe foreseeable future.Pelta Co pays corporation tax of 30% one year in arrears. The company can claim tax-allowabledepreciation on a 25% reducing balance basis.The views of the directors of Pelta Co are that all investment projects must be evaluated overfour years of operations, with an…
The cost characteristics of a CO testing machine that was purchased 5 years ago for $100,000 are shown below. The equation to determine the AW of retaining the tester one more year and then replacing it is: (a) AW = −15,000(A/P,i,1) − 54,000 + 10,000(A/F,i,1) (b) AW = −100,000(A/P,i,6) − 54,000 + 10,000(A/F,i,6) (c) AW = −60,000(A/P,i,1) − 42,000 + 40,000(A/F,i,1) (d ) AW = −100,000(A/P,i,5) − 42,000 + 15,000(A/F,i,5) Machine Age, Years from Purchase M&O Costs, $ per Year Salvage Value at End of Year, $ 1 42,000 60,000 2 47,000 40,000 3 49,000 31,000 4 50,000 24,000 5 52,000 15,000 6 54,000 10,000 7 63,000 10,000 8 67,000 10,000
PLEASE ANSWER BOTH POINTS (1 AND 2), PROPERLY BREAKDOWN POINT NUMBER 2 WITH THE CORRESPONDING OPERATIONS AND ALL THE RESULTS. InstructionsAn evaluation is needed for a sock production project that requires an initial investment of $50,000,000°, of which 80% corresponds to depreciable fixed assets, and 20% to working capital. The unit production cost is $10,000°°, and a unit sale value of $13,500°° is estimated. The market study revealed a potential demand of 20,000 units for the first year. The fixed assets are depreciated straight-line over a useful life of 10 years. Operational expenses are estimated at $4,000,000° for the first year. The fixed costs amount to $10,000,000° for the first year. The following increments are estimated: sales increase by 2% annually, variable unit cost by 3% annually, unit sale price by 3% annually, operational expenses by 6% annually, and fixed costs by 5% annually. The project has a useful life of 5 years. 1. Build the project's cash flow.2. Calculate…
Two machines are being taken into consideration for the manufacturing of a selected component for which there's a protracted term-demand. Machine A value P50,000.00 and is anticipated to final three years and feature a P10,000 salvage value. Machine B expenses P75,000.00 and is anticipated to final 6 years and feature 0 salvage value. Machine A can produce a component in 18 seconds; Machine B calls for simplest 12 seconds in step with component. The out-of-pocket hourly value of operation is P38.00 for A and P30.00 for B. Monthly Maintenance value are P200.00 for A and P220.00 for B. If interest invested is 15%, decide the range of components in step with yr. at which the machines are similarly economical. If the anticipated range of components in parts per year is extra than this break-even quantity, which gadget might be favored?

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