CNN reported that higher-income shoppers are the biggest bargain shoppers searching Amazon, clicking on their mobile devices andeven querying Alexa looking for the best deals. If Rebecca Johnson purchased a state-of-the-art Biologique Recherche facial machinefor her home business for $110,000, with a useful life of 5 years and a residual value of $36,000.What would be the book value of the machine after the first year using the straight-line depreciation method?Book value

Straight Line Depreciation = (Cost of the Asset- Residual Value)/Number of useful life Book Value of…

Answered: CNN reported that higher-income…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 1EA: Garrison Boutique, a small novelty store, just spent $4,000 on a new software program that will help...

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CNN reported that higher-income shoppers are the biggest bargain shoppers searching Amazon, clicking on their mobile devices and even querying Alexa looking for the best deals. If Rebecca Johnson purchased a state-of-the-art Biologique Recherche facial machine for her home business for $117,000, with a useful life of 4 years and a residual value of $39,500. What would be the book value of the machine after the first year using the straight-line depreciation method?
Heels, a shoe manufacturer, is evaluating the costs and benefits of new equipment that would custom fit each pair of athletic shoes. The customer would have his or her foot scanned by digital computer equipment; this information would be used to cut the raw materials to provide the customer a perfect fit. The new equipment costs $90,000 and is expected to generate an additional $35,000 in cash flows for five years. A bank will make a $90,000 loan to the company at a 10% interest rate for this equipment’s purchase. Use the following table to determine the break-even time for this equipment. (Round the present value of cash flows to the nearest dollar.)
Tom has recently opened The Sandal Shop in Warsaw (a store that specializes in fashionable sandals). In time, she hopes to open a chain of sandal shops. As a first step, she has gathered the following data for her new store: Sales price per pair of sandals $ 50,00 Variable expenses per pair of sandals $ 25,00 Contribution margin per pair of sandals $ 25,00 Fixed expenses per year: Building rental $ 14 000,00 Equipment depreciation $ 6 500,00 Selling $ 15 000,00 Administrative $ 19 500,00 Total fixed expenses $ 55 000,00 Required:1. What is the break-even point in unit sales and dollar sales? (Please interpret gained result) 2. Anna has decided that she must earn a profit of $20,000 the first year to justify her time and effort. How many pairs of sandals must be sold to attain this target profit? 3. Anna now has two salespersons working in the store—one full time…
A new book publishing and sales project estimates that the first year 7,000 printed units and 2,000 digital units will be sold.The printer will charge them $5 for each book.The publisher will sell the books for $12 each.The virtual books will be sold for $6 through a platform and the publisher receives $3.The authors of the books receive 5% of the sales made by the publisher, whether online or in print, which is recorded as an expense. The market study suggests that sales of printed books can increase at 20% per year and those of digital format at 30% per year.The initial equipment will be reduced, since they work with the subcontracting of printed material. Basically, they include computer equipment, software and furniture that have a value of 20,000; In addition, a vehicle will be purchased for a value of 15,000. Computer equipment, software and furniture are depreciated instraight line in 5 years. In year 6, these equipments must be bought again for the same value.The vehicle is…
The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purchasedits cars from a dealer and then sold the cars after three years of use. The company’s present fleet of cars isthree years old and will be sold very shortly. To provide a replacement fleet, the company is consideringtwo alternatives:Purchase alternative: The company can purchase the cars, as in the past, and sell the cars after threeyears of use. Ten cars will be needed, which can be purchased at a discounted price of $17,000each. If this alternative is accepted, the following costs will be incurred on the fleet as a whole:Annual cost of servicing, taxes,and licensing ........................................... $3,000Repairs, first year ....................................... $1,500Repairs, second year .................................. $4,000Repairs, third year ...................................... $6,000At the end of three years, the fleet could be sold for one-half of the original…
Garrison Boutique, a small novelty store, just spent $4,000 on a new software program that will help in organizing its inventory. Due to the steep learning curve required to use the new software, Garrison must decide between hiring two part-time college students or one full-time employee. Each college student would work 20 hours per week, and would earn $1 S per hour. The full-time employee would work 40 hours per week and would earn $15 per hour plus the equivalent of $2 per hour in benefits. Employees are given two polo shirts to wear as their uniform. The polo-shirts cost Garrison $10 each. What are the relevant costs, relevant revenues, sunk costs, and opportunity costs for Garrison?
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?
The manager at a Sherwin-Williams store has decided to purchase a new $30,000 paint mixing machine with high-tech instrumentation for matching color and other components. The machine may be paid for in one of two ways: (1) pay the full price now, less a 3% discount, or (2) pay $5,000 now,$8,000 one year from now, and $6,000 at the end of each of the next 4 years. If interest is 12% compounded annually, determine which way is best for themanager to make the purchase.
Juan Fox’ has started her own company, Foxy Jeans, which manufactures imprinted jeans. Since he just begun this operation, he rents the equipment from a local printing shop when necessary. The cost of using the equipment is P3,000. The materials used in one jean cost P200, and he can sell it at 350. Requirements: Provide for a mathematical model that will show how to maximize the profit. IF Juan sells 100 jeans, what will his total revenues, total costs, and profit? How many jeans must Juan sell to have zero profit and zero loss (break-even)?
Sadie May has decided to start a business where she will sell a single line of high heel shoes. Sadie will sell each pair of heels for $60 and will purchase the shoes from a supplier for $30 per pair. The supplier has offered Sadie two shipping options: either (1) Sadie can pay $5 per pair of heels ordered or (2) Sadie can pay a flat shipping cost of $500 per month regardless of the number of pairs ordered. All of Sadie’s sales will be made online. The cost to maintain and manage her website will be $750 per month. In addition, Sadie will rent a small space to store inventory for $250 per month. Sadie does not expect any additional costs in her operations as long as she does not sell more than 150 pairs of heels per month. Which of the following statements is incorrect? A. Shipping option 2 is a riskier cost structure for Sadie. B. At a monthly sales volume of 100 pairs of shoes, Sadie will be indifferent between the two shipping options. C. If…
Lee, a programmer, earned P350,000 in 2010, but in 2011, he began to manufacture computer monitors. After one year, he submitted the following data to his accountant. • He stopped renting out his cottage for P35,000 a year and used it as his factory. • The market value of the cottage increased from P700,000 to P710,000. • He spent P50,000 on materials, phone, utilities, etc. • He leased machines for P100,000 a year. • He paid P150,000 in wages. • He used P100,000 from his savings account, which pays five 5% interest a year. • He borrowed P400,000 at 10% a year from the bank. • He sold P1,600,000 worth of monitors. • Normal profit is P250,000 a year.
Lee, a programmer, earned P350,000 in 2010, but in 2011, he began to manufacture computer monitors. After one year, he submitted the following data to his accountant. • He stopped renting out his cottage for P35,000 a year and used it as his factory. • The market value of the cottage increased from P700,000 to P710,000. • He spent P50,000 on materials, phone, utilities, etc. • He leased machines for P100,000 a year. • He paid P150,000 in wages. • He used P100,000 from his savings account, which pays five 5% interest a year. • He borrowed P400,000 at 10% a year from the bank. • He sold P1,600,000 worth of monitors. • Normal profit is P250,000 a year. Compute for the following: * Lee’s explicit costs * Lee’s implicit cost * Lee’s economic profit

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