Calculate the explicit cost and implicit cost
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Azree an accountant, working for a foreign consultant firm and earning RM 78,000 per year is contemplating giving up his job and set up his own tax consultant firm. He estimates that renting an office would cost RM 780 per month, hiring a secretary with salary RM 1,500 per month and purchasing for required supplies would cost him RM 10,000 per annum. He estimated that his total revenues for the year would be RM 120,000.
a) Calculate the explicit cost and implicit cost
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- Shonda & Shonda is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1.200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are as follows: A. What will be the impact on the break-even point if Shonda & Shonda purchases the new computer? B. What will be the impact on net operating income if Shonda & Shonda purchases the new computer? C. What would be your recommendation to Shonda & Shonda regarding this purchase?Theresa is considering starting a small business. She plans to purchase equipment costing $145,000. Rent on the building used by the business will be $26,000 per year while other operating costs will total $30,000 per year. A market research specialist estimates that Theresa's annual sales from the business will amount to $80,000. Theresa plans to operate the business for 6 years. Disregarding the effects of taxes, what will be the amount of annual net cash flow generated by the business? A) $24,000 B) $56,000 C) $80,000 D) None of these answers is correct.Sarah earns an annual salary of £76,000, working for an investment bank. She is considering resigning and setting up her own business. Sarah estimates that the new business requires an initial investment of £96,000 for fixed assets with an expected useful life of five years. Forecast revenues and expenses for the first year of operations are. Sales Operating Expenses Rent Lease of equipment Staff salaries Supplies Utility bills Insurance Business rates Advertising Legal, audit and banking fees £320,000 £52,000 £13,250 £126,500 £22,000 £8,500 £2,500 £4,200 £7,000 £2,500 Sarah has personal savings sufficient to finance 70% of the initial investment. She is currently earning an annual interest rate of 1.2% on the savings. The rest of the investment finance would be provided by a five-year bank loan at a fixed annual rate of 5.9%. Required: a) Calculate the accounting profit for the first year of operations. Assume that the fixed assets are fully depreciated on a…
- Assume that the starting salary for a computer programmer in the United States is C$75,000 compared to C$50,000 in Canada (all values in Canadian dollars), that the starting age is 25, and that the person expects to be continuously employed until age 65. Assume, further, that earnings can be expected to grow at 6 percent per year in both jobs. A. Calculate the represent the value of earnings under the two alternatives, assuming a discount rate of 5 percent. How much would a potential migrant have to value living in Canada in order to stay? (I recommend doing this calculator in excel. You do not have to provide me with the calculations (i.e., your excel output), just the final answer. Y0u should NOT be using the approximation B. What factors can you identify (and possibly the value) that might offset the benefits of moving? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.The sales manager is deciding between two possible compensation structures for sales staff. Under one plan, salespeople would receive a base compensation of $80,000 per year plus a 1% commission on all sales to their customers. Under the other plan, the base compensation would drop to $40,000 per year, but the commission rate would increase to 5%. What are the advantages and disadvantages, to the company of both plans? As the accounting manager, would you have a preference? Why or why not? (answer in text form please (without image), Note: .Every entry should have narration please)Brenda Sheldon, CPA, pays her new staff accountant, Abby , a salary equivalent to $21 per hour while Brenda receives a salary equivalent to $37 per hour. The firm's predetermined indirect cost allocation rate for the year is $11 per hour. Sheldon bills for the firm's services at 34% over cost. Assume Brenda works 6 hours and Abby works 8 hours preparing a tax return for Mikayla Touchstone. 1. What is the total cost of preparing Touchstone's tax return? 2. How much will Brenda bill Touchstone for the tax work?
- A young mechanical engineer is considering establishing his own small company. Aninvestment of P400,000 will be required which will be recovered in 15 years. It is estimatedthat sales will be P800,000 per year and that operating expenses will be as follows. (see attached photo) The man will give u his regular job paying P216,000 per year and devote full time to the operation of the business; this will result in decreasing labor cost by P40,000 per year, material cost by P28,000 per year and overhead cost by P32,000 per year. If the man expects to earn at least 20% of his capital, should he invest?A proprietor who just inherited a building is considering using it in a new business venture.Projections for the business are: revenue of $100,000, fixed cost of $30,000, and variable costof $50,000. If the business is not started, the owner will work for a company for a wage of$23,000. Also, there have been two offers to rent the building, one for $1,000 per month andone for $1,200 per month. What are the expected annual net economic profits (losses) to theowner if the new business is started? A. $20,000 B. $(3,000) C. $(15,000) D. $(17,400)A proprietor (CHRISTIA) who just inherited a building is considering using it in a new business venture. Projections for the business are: revenue of $100,000, fixed cost of $30,000, and variable cost of $50,000. If the business is not started, the owner will work for a company for a wage of $23,000. Also, there have been two offers to rent the building, one for $1,000 per month and one for $1,200 per month. What is the relevant cost of the building (per annum) to be consider in determining whether to start the business?
- You are currently a worker earning $60,000 per year but are considering becoming an entrepreneur. You will not switch unless you earn an accounting profit that is on average at least as great as your current salary. You look into opening a small grocery store. Suppose that the store has annual costs of $150,000 for labor, $50,000 for rent, and $30,000 for equipment. There is a one-half probability that revenues will be $210,000 and a one-half probability that revenues will be $400,000. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (−) in front of those numbers. Enter a loss as a negative number. a. In the low-revenue situation, what will your accounting profit or loss be? $ What will your accounting profit or loss be in the high-revenue situation? $ b. On average, how much do you expect your revenue to be? $ Your accounting profit? $ Your economic profit? $…The company's revenue is 100 000 rubles. The cost of materials, raw materials is 35 000 rubles, the cost of fuel and energy consumption is 10 000 rubles. The wages of employees are 25 000 rubles. Having a specialist diploma, an entrepreneur could receive a wage as an employee in another company in the amount of 5000 rubles, while he could put the available money (200 000) into the bank at an annual interest rate of 10%. Calculate the accounting and economic profit of this firm.As the director of a construction firm, you are considering buying a new cement mixing truck for $103, 000. At the end of its useful life of 5 years, you expect to be able to sell it for $4, 300. the mixing truck is expected to have annual operating and maintenance expenses of $2, 300 Your cement-mixing truck is expected to depreciate for tax purposes at a declining balance rate of 25%. The corporate income tax rate is 30%. Your company’s WACC is 11%. Assume the asset pool remains open after selling the item. Calculate the equivalent annual after-tax cost., the half-year rule should be used where applicable. Round your answer to the nearest dollar
