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- The financial manager of Orbit Limited provided the following forecasts for 2023:Sales are estimated at 8 000 units with a selling price of R1 800 each. The manufacturing costs include direct materials of R460 per unit, direct labour of R315 per unit, variable overheads of R170 per unit and fixed overheads of R880 000. Fixed selling and administration costs are estimated at R2 000 000 and the variableselling costs are estimated to be 7.5% of sales.The directors are contemplating diversification in 2024 by entering the passenger transport market. This couldbe achieved through the purchase of a fleet of midi buses that are expected to cost R9 500 000. An additional R500 000 will be spent on import duties. The cost of operating the buses each year is expected to be R4 100 000 and the annual revenues from transporting the passengers are estimated at R7 000 000. The buses are expected to have a total salvage value of R1 000 000 and the estimated useful life of the buses is fiveyears. The…Mr. Sy is the general manager of the XXX Division, and his performance is measured using the residual income method. Mr. Sy is reviewing the following forecasts to his division for the next year:Category AmountsWorking Capital P 1,800,000Revenue 30,000,000Plant and Equipment 17,200,000If the imputed interest charge is 15% and Mr. Sy wants to achieve a residual income of P2,000,000 what will costs (total expenses) have to be in order to achieve the targeted residual income?Suppose that a manufacturer plans to produce 78,000 units of product duringa year. A lot of size L, to be determined, is to be made periodically, andevery time a lot is made, it is necessary to set up the appropriate machineryand other production facilities before production starts. The set up cost is thena fixed cost incurred for each lot produced and it is determined as $ 200. Whenproduction commences , the cost of making a unit is constant at $ 7.5 per unit.Inventory cost is to be determined on the basis that it costs $ 0.50 per year tocarry one unit in inventory. Also find how many lots the manufacturerwould make per year and each lot would be produced in how manydays ?.
- In planning its operations for 2021 based on a sales forecast of P6,000,000 and breakeven point in pesos of P4,000,000, Thone, Inc., prepared the following estimated data: Cost and Expenses (Variable) Direct materials P1,600,000 Direct labor 1,400,000 Factory overhead 600,000 Selling expenses 240,000 Administrative expenses 60,000 What would be the amount of fixed cost and expenses? 1350,000 1,400,000 c. 1,450,000 d. 1,500,000Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five-year period. His annual pay raises are determined by his division’s return on investment (ROI), which has exceeded 18% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B Initial Investment Cost of equipment (salvage value) 170000 380000 Annual revenues and costs Sales revenue 250000 350000 Variable expenses 120000 170000 Depreciation expense 34000 76000 Fixed out-of-pocket operating costs 70000 50000 The company’s discount rate is 16%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor using tables. Required: 1. Calculate the payback period for each product. 2. Calculate the net present value for each product. 3. Calculate the internal rate of return for each product. 4. Calculate the project…Study the scenario and complete the question that follows:A company that manufactures and sells one single product is currently operating at 85% of full capacityand producing 102 000 units per month. The current total monthly costs of production amount to R330000, of which R75 000 are fixed and are expected to remain unchanged for all levels of activity up to fullcapacity.A new potential customer has expressed interest in taking regular monthly delivery of 12 000 units at aprice of R2.80 per unit.All existing production is sold each month at a price of R3.25 per unit. If the new business is accepted,existing sales are expected to fall by 2 units for every 15 units sold to the new customer.RequiredDetermine the overall increase in monthly profit which would result from accepting the newbusiness.
- For the coming year, Bernardino Company anticipates a unit selling price of $85, a unit variable cost of $15, and fixed costs of $420,000. Compute the sales (units) required to realize operating income of $70,000.In planning its operations for 2011 on the basis of a sales forecast of 6,000,000 ASF Inc. prepared the following estimated data Costs and Expenses Fixed Variable Direct Material 1,600,000 Labor 1,400,000 Factory overhead 600,000 900,000 Selling expenses 240,000 360,000 Administrative expenses 60,000 140,000 Required: What would be the amount of sales at the breakeven point? 2,250,000 4,000,000 3,500,000 5,300,000Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,425,000.
- The following information relates to the unit product cost for a product manufactured by Nelson Industrial Company:Direct materials: $24 Direct Labor: 15 Variable overhead: 30 Fixed overhead: 18 Unit cost: 87 Line Item Description Cost Direct materials $24 Direct labor 15 Variable overhead 30 Fixed overhead 18 Unit cost $87 In addition, fixed selling costs are $500,000 per year, and variable selling costs are $12 per unit sold. Although production capacity is 600,000 units per year, the company expects to produce only 400,000 units next year. The product normally sells for $120 each. A customer has offered to buy 100,000 units for $90 each.If the firm produces the special order, the effect on income would be a(n): a. increase of $1.050,000. b. decrease of $900,000. c. decrease of $1,0500,000. d. increase of $900,000.A company has a new Plant A and an old Plant B in the same metropolitan area, each with a capacity of 12 units of product per month. Fixed expense at A is ₱40,000 per month and at B is ₱20,000 per month. Variable expense per month at A is ₱1,000xN² where N = the number of units produced. At B it is ₱2,000xM² , where M = the number of units produced. At present the sales have been established at 14 units per month with each plant producing 7 units. Should the interplant load be redistributed? Why? How? Show your complete solutionSpring Manufacturing sold 610,000 units of its product for $98 per unit in 2019. Variable cost per unit is $50, and total fixed costs are $1,870,000. Required: Calculate (a) contribution margin and (b) operating income. Spring’s current manufacturing process is labor intensive. Jim Gate, Spring’s production manager, has proposed investing in state-of-the-art manufacturing equipment, which will increase the annual fixed costs to $6,770,000. The variable costs are expected to decrease to $35 per unit. Spring expects to maintain the same sales volume and selling price next year. How would acceptance of Gate’s proposal affect your answers to (a) and (b) in requirement 1? Should Spring accept Gate’s proposal? Explain.