apacity than the model 330 machine, but its capacity is sufficient to continue making product E26T. Management also considered, but rejected, the alternative of dropping product E26T and not replacing the old machine. If that were done, the $285,000 invested in the new machine could instead have been invested in a project tha
Q: 50. A company discovered a P20,000 overstatement of its 2023 ending inventory after the financial…
A: Cost of goods sold = Beginning inventory + Purchases - Ending inventory If ending inventory is…
Q: Commercial bank A lends £1,000 to Mr B, who uses it to buy a car from Mrs C, paying by bank transfer…
A: Explanation : As the money changed just changed from account of one bank to account of other bank ,…
Q: Imp entered into the second forward contract to hedge a commitment to purchase equipment being…
A: Solution:- Given, On December 12, year 1, Imp Co. entered into three forward exchange contracts,…
Q: Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has…
A: Financial advantage of buying=Segment margin of new product-Difference in favor of continuing to…
Q: a. Net income was $467,000. b. Issued common stock for $70,000 cash. c. Paid cash dividend of…
A: Cash flow from financing activities includes transection related to issuing or repayment of…
Q: On December 3, Ter Company purchased inventory listed at P4,300 from Yup Corporation. Terms of the…
A: The question is based on the concept of Financial Accounting. Net method is the method under which…
Q: Find the maturity value if P25,000 is invested from October 15, 2016 to December 15, 2017 at a…
A: Under Simple Interest Method, Interest is paid only on the invested amount and calculated by…
Q: 1. A company has two departments, Y and Z that incur advertising expenses of $21,800. Advertising…
A: The question is based on the concept of Cost Accounting.
Q: If the value of Android Bank's assets falls by £226m, Android Bank will be insolvent. Select one:…
A: Insolvent means a financial distress, when person or entity unable to pay its debts. When total…
Q: Two department costing for Always Christmas Always Christmas makes artincial Christmas trees in two…
A: Calculation of No. of equivalent units 1)Cutting Department Particulars Actual units Equivalent…
Q: On March 25, 2020, Blue Steel co. purchased a new extrusion machine for Php 3,344,015 with an…
A: Formula: Annual Depreciation (straight line method) = (Cost of the assets - Residual value) /…
Q: Mailmax Direct is incorporated in the state of Arizona. Their charter authorized Mailmax to issue…
A: The shareholder's equity section is prepared to record the equity that belongs to the shareholders…
Q: PROBLEM 11 CR Company has the following estimated costs for the next year. Direct materials Direct…
A: "Since you have asked multiple questions, we will solve first question for you. If you want any…
Q: The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a…
A:
Q: Collegiate Publishing Inc. began printing operations on March 1. Jobs 301 and 302 were completed…
A: A journal entry is used to document a business deal in a company's accounting records. A record is…
Q: Several purchase transactions of the Chopper Pharmacy are presented below. The credit terms of the…
A: GIVEN OCT 6 Purchased merchandise for cash, P200,000; FOB shipping point. 12 Purchased merchandise…
Q: The president of Real Time Inc. has asked you to evaluate the proposed acquisition of a new…
A: Introduction Operating cash flow is the amount of cash generated by the company in normal course of…
Q: During the current year, merchandise is sold for $158,900 cash and $434,900 on account. The cost of…
A: Introduction: Gross profit : Deduction of cost of goods sold from Net sales value derives the Gross…
Q: etail Store, Dru ustry
A: Given:
Q: 60,000 understated; Depreciation expense 60,000 understated; Insurance expense 100,000 overstated;…
A: There are various errors that take place while recording, classifying, and summarising accounting…
Q: Fill in the blanks: Problem: On December 31, Mr. Adrian sold equipment amounting to P640,000 with a…
A: Invoice price means amount of goods less trade discount. Buyer have to pay invoice price. Sale term…
Q: Manufacturers Southern leased high-tech electronic equipment from International Machines on January…
A: A lease is an arrangement where a lessor agrees to allow a lessee to control the use of the asset…
Q: Cash Debit Credit Balance, December 31, prior year Receipts from customers Receipts from equipment…
A: Statement of cash flows: It is a financial statement that shows the increase or decrease in the cash…
Q: omplete an INCOME STATEMENT for Perez Pizza for the month ending January 31, 2020. They sold $15 100…
A: Income statement is a part of financial statements. It is used to show the result of business…
Q: Problem 5. Mr. Coach started a T-shirts business to be known as "Coach T-shirts". He performed…
A: Journal entries are the primary step to record the transaction in the books of account. The debit…
Q: Effect of Transactions on Cash Flows State the effect (cash receipt or payment and amount) of each…
A: Cash influx refers to the money that enters a business through sales, investments, or financing. It…
Q: Clarity Co. has a year-end of December 31. The company estimates its annual warranty expense to be…
A: A warranty is a promise to the customer that the company would provide free service for the product…
Q: Product A is made from two B parts and one C part. Part B is made using one D part and Part C is…
A: Product A = Product B + C
Q: The bank may require other forms of collateral security for bank loans. These may include O 1. a…
A: Collateral Securities Concept for Bank borrowing Banking
Q: How would you define depreciation and explain its purpose to someone who is not taking this course?…
A: Depreciation expense is the reduction in the value of assets due to normal wear and tear, the…
Q: The ledger of Vaughn Lake Lumber Supply on July 31, 2022, includes the selected accounts below…
A: Depreciation- Depreciation refers to a accounting method used to allocate the cost of a touchable or…
Q: Revenue (with VAT) - 300 Costs of sales 270 Selling costs - 20 Profit from sales (profit +, losses…
A: Answer - Calculation of Profit/ Loss - Particular Amount Revenue with VAT 300 Less :…
Q: Ace Products sells marked playing cards to blackjack dealers, It has not paid a dividend in many…
A: A stock dividend is when a corporation distributes its shareholder's shares rather than cash. It…
Q: Required: Prepare the operating activities section of the statement of cash flows using the indirect…
A: Introduction:- Cash flows are classified into three types as follows under:- Cash flows from…
Q: e A - The cash price of this machine was $38,000. Related expenditures included: sales tax $1,700,…
A: Depreciation Accounting
Q: a. Equipment with a book value of $82,000 and an original cost of $163,000 was sold at a loss of…
A: Working Note: Receipt from sale of Equipment = Book value of Equipment - Loss on sale of Equipment =…
Q: On April 1, Kang Corporation purchased back 250 shares of $1 par value common stock for $20 per…
A: Treasury stock: When shares are purchased from the open market by the company then these shares are…
Q: 100,000 understated. On
A: A series of high-level reports that describe a company's monetary performance, financial position,…
Q: cheir consumption over their lifetime. apede the process of consumption ed by such constraints,…
A: The b is explained as,
Q: The beginning balance of supplies is $4000. On December 31st, the physical count of remaining…
A: Formula used: Supplies used = Beginning supplies balance - Ending supplies balance Deduction of…
Q: Would you prefer the use of bottom-up or top-down budgeting for project cost control? What are the…
A: Top-down budgeting is a budgeting strategy in which top management creates a high-level budget for…
Q: For the given scenario, identify the weakness or weaknesses in internal control and opposite the…
A: Internal control is a process, performed by a board of directors of business, management and other…
Q: Burdensome employment regulations do more harm than good. If employees don’t like a particular job,…
A: Burdensome Regulatory Condition means any condition or restrictions imposed on authorizations or…
Q: f change
A: Trend analysis is an analysis of financial statements of a company over a period of time. Trend…
Q: Lavish Ltd. issued $4,000,000, six-year, 8% convertible bonds at par. Bonds pay interest annually.…
A: Convertible bonds are corporate bonds that can be exchanged for the issuing company's common stock.…
Q: Customers' current ac bank.
A: Liabilities are accumulated financial obligations that result from past events that are expected to…
Q: 0 hp sandmill for paint manufacturing cost P 360,000. Bank charges arrastre and brokerage cost P…
A: Straight-line depreciation The simplest straightforward approach for determining an asset's loss of…
Q: FILL - UP THE MISSING AMOUNTS: Sales CGS 40% GP 479,400 Expenses Net Profit (140,600)
A: The gross profit percentage is calculated as gross profit divided by net sales revenue.
Q: 49. Which of the following will result if the current year's ending inventory amount is understated?…
A: Ending inventory is credited to income statement.
Q: 2.Kings Company gives warranties at the time of sale. Sales of P20,000.000 were made evenly
A:
In making the decision to invest in the model 230 machine, the opportunity cost was:
Step by step
Solved in 3 steps
- St. Johns River Shipyards welding machine is 15 years old, fully depreciated, and has no salvage value. However, even though it is old, it is still functional as originally designed and can be used for quite a while longer. A new welder will cost 182,500 and have an estimated life of 8 years with no salvage value. The new welder will be much more efficient, however, and this enhanced efficiency will increase earnings before depreciation from 27,000 to 74,000 per year. The new machine will be depreciated over its 5-year MACRS recovery period, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The applicable corporate tax rate is 25%, and the project cost of capital is 12%. What is the NPV if the firm replaces the old welder with the new one?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. 26,000Jonfran Company manufactures three different models of paper shredders including the waste container, which serves as the base. While the shredder heads are different for all three models, the waste container is the same. The number of waste containers that Jonfran will need during the following years is estimated as follows: The equipment used to manufacture the waste container must be replaced because it is broken and cannot be repaired. The new equipment would have a purchase price of 945,000 with terms of 2/10, n/30; the companys policy is to take all purchase discounts. The freight on the equipment would be 11,000, and installation costs would total 22,900. The equipment would be purchased in December 20x4 and placed into service on January 1, 20x5. It would have a five-year economic life and would be treated as three-year property under MACRS. This equipment is expected to have a salvage value of 12,000 at the end of its economic life in 20x9. The new equipment would be more efficient than the old equipment, resulting in a 25 percent reduction in both direct materials and variable overhead. The savings in direct materials would result in an additional one-time decrease in working capital requirements of 2,500, resulting from a reduction in direct material inventories. This working capital reduction would be recognized at the time of equipment acquisition. The old equipment is fully depreciated and is not included in the fixed overhead. The old equipment from the plant can be sold for a salvage amount of 1,500. Rather than replace the equipment, one of Jonfrans production managers has suggested that the waste containers be purchased. One supplier has quoted a price of 27 per container. This price is 8 less than Jonfrans current manufacturing cost, which is as follows: Jonfran uses a plantwide fixed overhead rate in its operations. If the waste containers are purchased outside, the salary and benefits of one supervisor, included in fixed overhead at 45,000, would be eliminated. There would be no other changes in the other cash and noncash items included in fixed overhead except depreciation on the new equipment. Jonfran is subject to a 40 percent tax rate. Management assumes that all cash flows occur at the end of the year and uses a 12 percent after-tax discount rate. Required: 1. Prepare a schedule of cash flows for the make alternative. Calculate the NPV of the make alternative. 2. Prepare a schedule of cash flows for the buy alternative. Calculate the NPV of the buy alternative. 3. Which should Jonfran domake or buy the containers? What qualitative factors should be considered? (CMA adapted)
- Newmarge Products Inc. is evaluating a new design for one of its manufacturing processes. The new design will eliminate the production of a toxic solid residue. The initial cost of the system is estimated at 860,000 and includes computerized equipment, software, and installation. There is no expected salvage value. The new system has a useful life of 8 years and is projected to produce cash operating savings of 225,000 per year over the old system (reducing labor costs and costs of processing and disposing of toxic waste). The cost of capital is 16%. Required: 1. Compute the NPV of the new system. 2. One year after implementation, the internal audit staff noted the following about the new system: (1) the cost of acquiring the system was 60,000 more than expected due to higher installation costs, and (2) the annual cost savings were 20,000 less than expected because more labor cost was needed than anticipated. Using the changes in expected costs and benefits, compute the NPV as if this information had been available one year ago. Did the company make the right decision? 3. CONCEPTUAL CONNECTION Upon reporting the results mentioned in the postaudit, the marketing manager responded in a memo to the internal audit department indicating that cash inflows also had increased by a net of 60,000 per year because of increased purchases by environmentally sensitive customers. Describe the effect that this has on the analysis in Requirement 2. 4. CONCEPTUAL CONNECTION Why is a postaudit beneficial to a firm?ZZOOM, Inc., has decided to discontinue manufacturing its Z Best model. Currently, the company has 4,600 partially completed Z Best models on hand. The government has put a recall on a particular part in the Z Best model, so each base model must now be reworked to accommodate the style of the new part. The company has spent $110 per unit to manufacture these Z Best models to their current state. Reworking each Z Best model will cost $22 for materials and $25 for direct labor. In addition, $9 of variable overhead and $34 of allocated fixed overhead (relating primarily to depreciation of plant and equipment) will be allocated per unit. If ZZOOM completes the Z Best models, it can sell them for $180 per unit. On the other hand, another manufacturer is interested in purchasing the partially completed units for $105 each and converting them into Z Plus models. Prepare a differential analysis per unit to determine if ZZOOM should complete the Z Best models or sell them in their current state.Mallette Manufacturing, Inc., produces washing machines, dryers, and dishwashers. Because of increasing competition, Mallette is considering investing in an automated manufacturing system. Since competition is most keen for dishwashers, the production process for this line has been selected for initial evaluation. The automated system for the dishwasher line would replace an existing system (purchased one year ago for 6 million). Although the existing system will be fully depreciated in nine years, it is expected to last another 10 years. The automated system would also have a useful life of 10 years. The existing system is capable of producing 100,000 dishwashers per year. Sales and production data using the existing system are provided by the Accounting Department: All cash expenses with the exception of depreciation, which is 6 per unit. The existing equipment is being depreciated using straight-line with no salvage value considered. The automated system will cost 34 million to purchase, plus an estimated 20 million in software and implementation. (Assume that all investment outlays occur at the beginning of the first year.) If the automated equipment is purchased, the old equipment can be sold for 3 million. The automated system will require fewer parts for production and will produce with less waste. Because of this, the direct material cost per unit will be reduced by 25 percent. Automation will also require fewer support activities, and as a consequence, volume-related overhead will be reduced by 4 per unit and direct fixed overhead (other than depreciation) by 17 per unit. Direct labor is reduced by 60 percent. Assume, for simplicity, that the new investment will be depreciated on a pure straight-line basis for tax purposes with no salvage value. Ignore the half-life convention. The firms cost of capital is 12 percent, but management chooses to use 20 percent as the required rate of return for evaluation of investments. The combined federal and state tax rate is 40 percent. Required: 1. Compute the net present value for the old system and the automated system. Which system would the company choose? 2. Repeat the net present value analysis of Requirement 1, using 12 percent as the discount rate. 3. Upon seeing the projected sales for the old system, the marketing manager commented: Sales of 100,000 units per year cannot be maintained in the current competitive environment for more than one year unless we buy the automated system. The automated system will allow us to compete on the basis of quality and lead time. If we keep the old system, our sales will drop by 10,000 units per year. Repeat the net present value analysis, using this new information and a 12 percent discount rate. 4. An industrial engineer for Mallette noticed that salvage value for the automated equipment had not been included in the analysis. He estimated that the equipment could be sold for 4 million at the end of 10 years. He also estimated that the equipment of the old system would have no salvage value at the end of 10 years. Repeat the net present value analysis using this information, the information in Requirement 3, and a 12 percent discount rate. 5. Given the outcomes of the previous four requirements, comment on the importance of providing accurate inputs for assessing investments in automated manufacturing systems.
- Trifecta Distributors has decided to discontinue manufacturing its X Plus model. Currently, the company has 4,600 partially completed X Plus models on hand. The government has put a recall on a particular part in the X Plus model, so each base model must now be reworked to accommodate the style of the new part. The company has spent $110 per unit to manufacture these X Plus models to their current state. Reworking each X Plus model will cost $20 for materials and $20 for direct labor. In addition, $7 of variable overhead and $32 of allocated fixed overhead (relating primarily to depreciation of plant and equipment) will be allocated per unit. Il Trifecta completes the X Plus models, it can sell them for $160 per unit. On the other hand, another manufacturer is interested in purchasing the partially completed units for $104 each and converting them into Z Plus models. Prepare a differential analysis per unit to determine if Trifecta should complete the X Plus models or sell them in their current state.Bienestar, Inc., has two plants that manufacture a line of wheelchairs. One is located in Kansas City, and the other in Tulsa. Each plant is set up as a profit center. During the past year, both plants sold their tilt wheelchair model for 1,620. Sales volume averages 20,000 units per year in each plant. Recently, the Kansas City plant reduced the price of the tilt model to 1,440. Discussion with the Kansas City manager revealed that the price reduction was possible because the plant had reduced its manufacturing and selling costs by reducing what was called non-value-added costs. The Kansas City manufacturing and selling costs for the tilt model were 1,260 per unit. The Kansas City manager offered to loan the Tulsa plant his cost accounting manager to help it achieve similar results. The Tulsa plant manager readily agreed, knowing that his plant must keep pacenot only with the Kansas City plant but also with competitors. A local competitor had also reduced its price on a similar model, and Tulsas marketing manager had indicated that the price must be matched or sales would drop dramatically. In fact, the marketing manager suggested that if the price were dropped to 1,404 by the end of the year, the plant could expand its share of the market by 20 percent. The plant manager agreed but insisted that the current profit per unit must be maintained. He also wants to know if the plant can at least match the 1,260 per-unit cost of the Kansas City plant and if the plant can achieve the cost reduction using the approach of the Kansas City plant. The plant controller and the Kansas City cost accounting manager have assembled the following data for the most recent year. The actual cost of inputs, their value-added (ideal) quantity levels, and the actual quantity levels are provided (for production of 20,000 units). Assume there is no difference between actual prices of activity units and standard prices. Required: 1. Calculate the target cost for expanding the Tulsa plants market share by 20 percent, assuming that the per-unit profitability is maintained as requested by the plant manager. 2. Calculate the non-value-added cost per unit. Assuming that non-value-added costs can be reduced to zero, can the Tulsa plant match the Kansas City per-unit cost? Can the target cost for expanding market share be achieved? What actions would you take if you were the plant manager? 3. Describe the role that benchmarking played in the effort of the Tulsa plant to protect and improve its competitive position.Although the Chen Company’s milling machine is old, it is still in relatively good working order and would last for another 10 years. It is inefficient compared to modern standards, though, and so the company is considering replacing it. The new milling machine, at a cost of $110,000 delivered and installed, would also last for 10 years and would produce after-tax cash flows (labor savings and depreciation tax savings) of $19,000 per year. It would have zero salvage value at the end of its life. The project cost of capital is 10%, and its marginal tax rate is 25%. Should Chen buy the new machine?
- Jamboree Outfitters, Inc., produces pocket knives and fillet knives for outdoor sporting. In the process of making the knives, some irregularities occur and no further work is performed on the blades. Jamboree has been selling these irregular blades to scrap dealers for $5.00 per pound. Last year, the company sold 50,000 lbs. of scrap. The company found that Amazon will buy the irregular knives for $12 each provided Jamboree finishes producing the knives into sellable form and also assuming there are enough irregular blades to make 50,000 completed knives. Jamborees processes would not need reprogramming, particularly in the shaping and sharpening processes. However, this would require one additional worker, and new packaging would be needed. The total variable cost to produce the irregulars is $4.85. Fixed costs would increase by $175,000 per year for the lease of the packaging equipment and the new worker. Jamboree estimates it could produce and sell 50,000 knives per year. Should Jamboree continue to sell the scrap blades or should Jamboree process the irregulars to sell to Amazon?Your family started a new manufacturing business making outdoor benches for use in parks and outdoor venues two years ago. The business has been very successful, and sales are soaring. Because of this success, your family realizes that the equipment purchased to start the business will not last as long as expected because the company has needed to run twenty-four-hour production shifts for most of the past year. There has been a lot of wear and tear on the equipment. The original useful lives and salvage values are not as accurate as your family had hoped. Your aunt, who is the production manager for the family business, has approached you because she is concerned about this issue, and she knows you have had an accounting class. What advice do you have for her? How should the company readjust given the realities of the last few years?Filkins Fabric Company is considering the replacement of its old, fully depreciated knitting machine. Two new models are available: Machine 190-3, which has a cost of $190,000, a 3-year expected life, and after-tax cash flows (labor savings and depreciation) of $87,000 per year; and Machine 360-6, which has a cost of $360,000, a 6-year life, and after-tax cash flows of $98,300 per year. Knitting machine prices are not expected to rise because inflation will be offset by cheaper components (microprocessors) used in the machines. Assume that Filkins’ cost of capital is 14%. Should the firm replace its old knitting machine? If so, which new machine should it use? By how much would the value of the company increase if it accepted the better machine? What is the equivalent annual annuity for each machine?