If Apple won an order to sell 500 of its new minicomputers to Australia, but the Australian government stipulated that 20 percent of the component parts of the minicomputers that it purchased must be produced in Australia, that stipulation would be an example of a(n) O a. domestic producer content. O b. ad hoc content requirement. Oc specific content requirement. O d. local content requirement. O e. ad valorem content requirement.
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- Refer to Exercise 13-48. Suppose that Kamber is considering building a new plant inside a foreign trade zone to replace its chemical manufacturing plant. Required: 1. How much duty will be paid per year by the factory located inside the foreign trade zone? 2. How much in duty and duty-related carrying costs will be saved by relocating inside the foreign trade zone? Kamber, Inc., owns a factory located close to, but not inside, a foreign trade zone. The plant imports volatile chemicals that are used in the manufacture of chemical reagents for laboratories. Each year, Kamber imports about 14,200,000 of chemicals subject to a 30% tariff when shipped into the United States. About 15% of the imported chemicals are lost through evaporation during the manufacturing process. In addition, Kamber has a carrying cost of 10% per year associated with the duty payment. On average, the chemicals are held in inventory for 9 months. Required: 1. How much duty is paid annually by Kamber? 2. What is the carrying cost associated with the payment of duty?Due to rising labor costs in Malaysia, Domain Computer, based in Singapore, is considering shifting part of its production facilities from Malaysia to an emerging market, Vietnam, to better integrate its supply chain in the South east Asia region. John Lawson, the CFO of the company, estimates that Domain Computer needs to invest USD735,000 to acquire an existing factory in Vietnam and another USD285,000 in renovations and installation of new machineries. The cost of training new workers is estimated to be USD310,000. He believes that the new factory will lead to an estimated USD928,000 savings in labor costs and another USD417,000 savings in logistics expenses. Required: Use cost-benefit analysis to recommend whether Domain Computer should shift parts of its production facilities from Malaysia to Vietnam. Explain your answer. You are required to write 500 to 800 words. ( Currently I have completed my Cost-benefit analysis; but I am confused as to how to use PESTLE's analysis with…DD Limited, South Africa, is a specialist manufacturer of electronic scooters. In seeking to expand its operations, it could acquire a French subsidiary company, AAA Limited, or set up a new division in its home market. The relevant figures for these two options are:Set up new division at home R andCost of setting up premises 2 2 440 000Cost of machinery 8 7 00 000Annual sales 33 000 000Annual variable cost 1 4 050 000Additional head office expenses 1 300 000Existing head office expenses 3 220 000Depreciation: machinery 10% on cost annually 8 7 0 000Acquisition EuroAcquire shares from existing shareholders 28 000 000Redundancy costs 5 000 000Annual Sales 39 000 000Annual variable costs 18 000 000Annual fixed costs 10 000 000Consultants fees 750 000Additional information:- The project is expected to last for 7 years.- DD Limited, current cost of capital is 10%.- The French inflation is expected to be below the South African inflation by 1% per year, throughout the life of…
- 17. Companies are involved in exporting their product to different parts of the world then setting up a producing facility abroad. Explain what are the advantages and limitation of such strategy.Davao has a potential foreign customer that has offered to buy 1,500 tons at P450 per ton. Assume that all of Davao’s costs would be at the same levels and rates as last year. What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity? Without prejudice to your answers to previous questions, and assume that Davao plans to market its product in a new territory. Davao estimates that an advertising and promotion program costing P61,500 annually would need to be undertaken for the next two or three years. In addition, a P25 per ton sales commission over and above the current commission to the sales force in the new territory would be required. How many tons would have to be sold in the new territory to maintain Davao’s current after-tax income of P94,500? If the sales volume is estimated to be 2,100 tons in the next year, and if the prices and costs stay at the same levels and amounts next year, the…Lobby Company produces and sells its only product XT-300. The company has been approached by a new customer from the USA with an offer to purchase 15,000 units of XT-300 for $11.50 each. Selling to the US will not affect the company’s other customers, and existing sales would not be affected. Lobby normally produces 110,000 units per year but only plans to produce and sell 90,000 in the coming year. Exporting the product to the USA will require a further packaging cost of $0.30 per unit. The normal sales price is $16 per unit. Unit cost information for the normal level of activity is as follows: Direct materials $4.50 Direct labour 4.20 Variable overhead 1.65 Fixed overhead 2.00 Total $12.35 Required: A). What are the relevant costs and benefits of this special order? B). Will operating income increase or decrease if the order from this new customer is accepted – if so, by how much? C). Suppose the new customer wants to buy 25,000 units, should…
- Lobby Company produces and sells its only product XT-300. The company has been approached by a new customer from the USA with an offer to purchase 15,000 units of XT-300 for $11.50 each. Selling to the US will not affect the company’s other customers, and existing sales would not be affected. Lobby normally produces 110,000 units per year but only plans to produce and sell 90,000 in the coming year. Exporting the product to the USA will require a further packaging cost of $0.30 per unit. The normal sales price is $16 per unit. Unit cost information for the normal level of activity is as follows: Direct materials $4.50 Direct labour 4.20 Variable overhead 1.65 Fixed overhead 2.00 Total $12.35 Required: A). What are the relevant costs and benefits of this special order? B). Will operating income increase or decrease if the order from this new customer is accepted – if so, by how much?Lobby Company produces and sells its only product XT-300. The company has been approached by a new customer from the USA with an offer to purchase 15,000 units of XT-300 for $11.50 each. Selling to the US will not affect the company’s other customers, and existing sales would not be affected. Lobby normally produces 110,000 units per year but only plans to produce and sell 90,000 in the coming year. Exporting the product to the USA will require a further packaging cost of $0.30 per unit. The normal sales price is $16 per unit. Unit cost information for the normal level of activity is as follows: Direct materials $4.50 Direct labour 4.20 Variable overhead 1.65 Fixed overhead 2.00 Total $12.35 Required: C). Suppose the new customer wants to buy 25,000 units, should Lobby accept the offer? Show with calculations the effect on net incomeDavao has a potential foreign customer that has offered to buy 1,500 tons at P450 per ton. Assume that all of Davao’s costs would be at the same levels and rates as last year. What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity? Answer: 221,500 Without prejudice to your answers to previous questions, and assume that Davao plans to market its product in a new territory. Davao estimates that an advertising and promotion program costing P61,500 annually would need to be undertaken for the next two or three years. In addition, a P25 per ton sales commission over and above the current commission to the sales force in the new territory would be required. How many tons would have to be sold in the new territory to maintain Davao’s current after-tax income of P94,500? Answer: 307.5
- Wellington Manufacturing manufactures industrial ovens used primarily in the process of coating or painting metals. The ovens are sold throughout the world, and units are manufactured to customers’ specifications. On June 15, the company committed to sell two ovens to a major transnational customer.One of the ovens has a selling price of $549,600 and is to be paid for with foreign currency A (FCA). The other unit has a selling price of $297,975 and is to be paid for with foreign currency B (FCB). Both units were shipped, FOB shipping point, on September 15, and payment is due within 30 days of shipment. In order to hedge against exchange rate risks,Wellington acquired two put options on June 15 with notional amounts equal to the respective foreign currency selling prices. The options expire on October 15, and customer remittances are also received on October 15. Relevant information concerning the options and exchange rates is as shown: Fair Value of Option June 15 September 15…Assume the U.S. corporate income tax rate is 40 percentand the Mexican corporate income tax rate is 30 percent.Jacques International Apparel Company has subsidiaries inboth the U.S. and Mexico. Jacques is trying to decide whattransfer price to use for its famous French frock, whichis being transferred from the U.S. subsidiary to theMexican subsidiary. It could ship the frock at the marketprice of $75 or at cost plus 20 percent. The cost of the frockis $40. Which transfer price would minimize Jacques’s taxburden?a. $75.b. $48.c. $90.d. $75 $40 $35.The Zomcast cable TV company is considering out- sourcing its call center to the Philippines. The cost of hiring operators and staff in the Philippines is 60 per- cent of the salary and benefits paid in the U.S. The operators are slightly less efficient at handling calls They frequently read from scripts and are not experi- enced in handling calls. The efficiency is estimated to be 80 percent of the U.S. in terms of staffing operators. Currently, the U.S. has an average of 83 operators handling calls paid at $15.00 per hour and 5 managers. The call center is staffed around the clock and throughout the year, but each operator works 2000 hours in a year. The Philippines will need the same number of managers. It will cost $100,000 to train the operators. It will cost an additional $110,000 per year to administrate the contract and supervise the operation from the U.S headquarters. a. What are the total costs of outsourcing this call center to the Philippines compared to the U.S.? b. What…