In keeping with the increasingly popular merchandising theme of customization an entrepreneurial engineer started a business making customized bobblehead dolls. He entered into a contract with Binkely Toys, Inc. the maker of the dolls to purchase bobbleheads in lots of 250 for $2500. If the engineers initial investment was $59,000 and his profit was $37.000 in year 1 and $47.000 in year 2. his rate of return was closest
Q: Barry bought a new television set for $425. He paid nothing down but agreed to payments of $37.28…
A: Finance charge will be the difference between the total payments in loan and the loan…
Q: 2. You just graduated from Rotman Commerce and landed a job on Bay Street. Your annual salary is…
A: a) To calculate the present value of all your future earnings, we need to discount each year's…
Q: Why can an M&A fail? O a. Economies of scale O b. shortcomings of the due diligence process,…
A: In general terms merger and acquisition refers to the consolidation of assets of 2 or more entities.…
Q: Assume that interest rates on 20-year Treasury and corporate bonds with different ratings, all of…
A: Corporate Bond: It is a debt security issued by the company for raising capital. The investor is…
Q: Your portfolio allocates equal funds to DW Co. and Woodpecker, Inc. DW Co. stock has an annual…
A: Here,
Q: Your company follows a constant debt-to-equity ratio policy. Its debt is represented by a single…
A: (Assume a Modigliani Miller world without taxation. In such a world, the value of a firm is…
Q: QUESTION 10 4(a) and 4(b) refer to the following. 4(a) What is internal rate of return for cash flow…
A: Internal Rate of is also known as IRR. It is a Capital budgeting techniques which help in decision…
Q: A passive benchmark portfolio is I. a portfolio where the asset allocation across broad asset…
A: A passive portfolio is a portfolio that follows a market index and replicates its performance with…
Q: Compute the traditional payback period (PB) for a project that costs $30,000 if it is expected to…
A: Initial Cost = $30,000 Cash flow = $10,000 Time = 6 years Rate of return = 12%
Q: A high acco counts receivable receivable turnover ratio indicates A. customers are making payments…
A: Account Receivable Turnover Ratio: The ratio is calculated as follow with the help of credit sales…
Q: r the given cash flows, suppose the firm uses the NPV decision rule.Year Cash Flow0 −$ 159,0001…
A: NPV net present value is the difference between the present value of cash flow and initial…
Q: Give typing answer with explanation and conclusion You are considering purchasing a put on a stock…
A: Put option refers to an option which provides the right but the obligation is not provided at the…
Q: Stock Intel Coca-Cola Bore Industries Expected Return 26% 6% 2% Volatility 50% 25% 25% Intel 1.0 0.0…
A: Expected return of Bore Industries is 2% is way lower, when compared with Intel which has 26% and…
Q: Assume that 3-month Treasury bills totaling $25 billion were sold in $10,000 denominations at a…
A: A treasury bill is a kind of debt security issued by the government and private companies for…
Q: i)discuss accounting issues in risk management, and explain the following terms: fair value hedge,…
A: “Since you have posted multiple questions with multiple sub parts,we will provide the solution only…
Q: When selling prices and inventory costs are stable, a decrease in units sold would result to _sales…
A: Varaince is the difference of actual results and budgeted data.
Q: An 8 year goverment bond makes annual coupon payments of 3% and offers a yeild of 12% annually…
A: Rate of return refers to the minimum return to be earned by the bondholders on the amount of…
Q: The capital investment committee of Arches Landscaping Company is considering two capital…
A: Net Present value is present value of cash flow minus initial investment
Q: Gil wants to have $8,750 in 10 years. Use the present value formula to calculate how much he should…
A: Compound = semiannually = 2 Future value = fv = $8750 Time = t = 10 * 2 = 20 Interest rate = r = 4 /…
Q: A written authorization given by a shareholder to someone else to represent him or her and to vote…
A: The shareholder refers to the individual that owns a part of the company through the purchase of the…
Q: or working for NPV and EAA calculation?
A: EAA is calculated as shown below. EAA=NPV×r1-11+rnHere,Cost of capital/ WACC=rLife of project=n
Q: Suppose the farmer takes a futures position on his expected production of wheat in September. Will…
A: To determine whether the farmer's futures position will help him reduce his risk, we need to compare…
Q: Ebenezer Scrooge has invested 55% of his money in share A and the remainder in share B. He assesses…
A: The standard deviation of the portfolio refers to the spread of the returns around their mean value.…
Q: An investment of 1000 is to be used to make payments of 100 at the end of every year for as long as…
A: It's a time value of money concept based question. The concept needs to be applied several times to…
Q: 14. Sarah had some money in the piggy bank. On Monday, she took out money to buy a present. She had…
A: The amount initially placed in the piggy bank is the sum of money that the person had to start with.…
Q: I need to have $440,000 in five years in order to retire. I can buy bonds that will pay a 8.8%…
A: FV = A * (1+r)n where , FV = future value A = amount of investment today r = interest rate n = time…
Q: te Corporation has an outstanding debt of $1 s annual interest payment and has three year ree years…
A: In case of interest rate swap, one party pays floating rate to the counter party and receives a…
Q: Suppose that you took out a loan at 10% interest for 283 days. If the amount of interest was…
A: Interest rate = 10% Period = 283 days Amount of interest = $852.88
Q: Generally the smaller the value of a stock transaction, the higher the percentage commission charged…
A: False. In general, the percentage commission charged on a stock transaction tends to decrease as the…
Q: selling after one year at (i) $56; (ii) $50; (iii) $44? (Negative values should be indicated by a…
A: Rate of return is calculated as shown below. Rate of return=Cash inflows-Cash outflowsCash outflowIn…
Q: Selected data from ABC Co. for 2021 appear below: Sales $100,000 Operating expenses $18,000 60,000…
A: Profit margin % = (Net income ÷ sales ) × 100. Where , Net income is profit after taxes .
Q: You can earn .53 percent per month at your bank. If you deposit $3,600, how long must you wait until…
A: Present value is the estimation of the current value of future cash value which is likely to be…
Q: anko Wellspring Inc. has a pump with a book value of $35,000 and a 4-year remaining life. A new,…
A: Replacement decisions can have a significant impact on a business's operations and financial…
Q: the question using only equations and explain every step, DO not use excel. also draw a cashflow…
A: Future value of amount includes the amount of deposit made and amount of compounding interest…
Q: An individual has $35,000 invested in a stock which has a beta of 0.8 and $40,000 invested in a…
A: Portfolio Beta simply means to be a risk of all those investments, securities, or financial…
Q: ABC Co.'s current ratio is greater than 1. Purchasing raw materials on credit would: A. increase the…
A: A current ratio can be determined by dividing current assets by the current liabilities. Formula,…
Q: Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It…
A: 1. Cost of Machine = purchase price + installation costs. 2. Depreciation per year = cost of Machine…
Q: Question 20 Which of the following is NOT a major source of Medicare financing? A. trust fund…
A: Medicare is a federal health insurance program that provides coverage for individuals who are 65…
Q: Which will create the most favorable effect in gross profit A. 10% increase in selling price B. 10%…
A: Assume Selling price. = 120 Costs: Production cost…
Q: There is a 30% chance that the amount of oil in a prospective field is 5 million barrels and a 70%…
A: NPV represents the worth generated by a project in absolute profitability dollar terms. It is…
Q: A firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow 0 −$ 28,000 1…
A: Net Present Value - It is the difference between the present value of cash outflow and present value…
Q: 24 Worst Buy Company has had a lot of complaints from customers of late, and its stock price is now…
A: Stock Split. Stock Split - It is a process wherein the number of outstanding shares increase say for…
Q: Complete the following amortization chart by using Table 15.1. Note: Round your "Payment per $1,000…
A: It's important for borrowers to carefully consider the interest rate and other terms of a loan…
Q: Too Young, Incorporated, has a bond outstanding with a coupon rate of 7.1 percent and semiannual…
A: The cost of debt is the expected return of the bond. The after-tax cost of debt is the cost of debt…
Q: Suppose a new machine costs $100,000 and will provide nominal operating income of $50,000 in each of…
A: 1. NPV of the project means Net present value of the project. NPV is calculated by deducting initial…
Q: 1. Morgan won $2,141.11 at a work raffle. They deposited $1,866.48 into their savings account. What…
A: Part-1: Winning Amount that Morgan receive $2,141.11 Deposited Amount in saving account…
Q: A firm reported income of P100,000, P120,000 and P130,000 for years ended December 31, 2019, 2020…
A: Net Income for year ended December 31, 2021 P130,000 Net Income for year ended December 31, 2020…
Q: Lyndsay puts $1,000.00 into a savings account that pays 3% interest, compounded annually. As the…
A: The concept of time value of money will be used here. Money invested today or deposited today grows…
Q: Your father has RM500,000 and wants to retire. He expects to live for another 20 years, and to be…
A: The maximum amount that can be withdrawn depends on the time period and interest rate of the period…
Q: Jami's Home Repair borrows $6,000, at 13.75% interest, for 330 days. Use the exact interest method…
A: Principal Amount = p = $6000 Interest rate = r = 13.75% Time = t = 330 days
Step by step
Solved in 4 steps
- Colin OShea has a carpentry shop that employs 4 carpenters. Colin received an order for 1,000 coffee tables. The coffee tables have a round table top and four decorative legs. An offer for $500 per table was received. Colin found an unfinished round table top that he could buy for $50 each. A. Using this quantitative cost data to make the table top, should Colin buy the table top or make it? B. What qualitative factors would be included in your decision. B. Can the vendor make it to the same quality standards? Can it be completed on time? Is there idle capacity in the factory that could be used?Quality Clothing, Inc., produces skorts and jumper uniforms for schoolchildren. In the process of cutting out the cloth pieces for each product, a certain amount of scrap cloth is produced. Quality has been selling this cloth scrap to Jorges Scrap Warehouse for $3.25 per pound. Last year, the company sold 40,000 lb. of scrap, which would be enough to make 10,000 teddy bears that the management of Quality is now interested in producing. Their processes would need some reprogramming, particularly in the cutting and stitching processes, but it would require no additional worker training. However, new packaging would be needed. The total variable cost to produce the teddy bears $3.85. Fixed costs would increase by $95,000 per year for the lease of the packaging equipment and Quality estimates it could produce and sell 10,000 teddy bears per year. Finished teddy bears could be sold for $18.00 each. Should Quality continue to sell the scrap cloth or should Quality process the scrap into teddy bears to sell?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.
- Gaston Company manufactures furniture. One of its product lines is an economy-line kitchen table. During the last year, Gaston produced and sold 100,000 units for 100 per unit. Sales of the table are on a bid basis, but Gaston has always been able to win sufficient bids using the 100 price. This year, however, Gaston was losing more than its share of bids. Concerned, Larry Franklin, owner and president of the company, called a meeting of his executive committee (Megan Johnson, marketing manager; Fred Davis, quality manager; Kevin Jones, production manager; and Helen Jackson, controller). LARRY: I dont understand why were losing bids. Megan, do you have an explanation? MEGAN: Yes, as a matter of fact. Two competitors have lowered their price to 92 per unit. Thats too big a difference for most of our buyers to ignore. If we want to keep selling our 100,000 units per year, we will need to lower our price to 92. Otherwise, our sales will drop to about 20,000 to 25,000 per year. HELEN: The unit contribution margin on the table is 10. Lowering the price to 92 will cost us 8 per unit. Based on a sales volume of 100,000, wed make 200,000 in contribution margin. If we keep the price at 100, our contribution margin would be 200,000 to 250,000. If we have to lose, lets just take the lower market share. Its better than lowering our prices. MEGAN: Perhaps. But the same thing could happen to some of our other product lines. My sources tell me that these two companies are on the tail end of a major quality improvement programone that allows them significant savings. We need to rethink our whole competitive strategyat least if we want to stay in business. Ideally, we should match the price reduction and work to reduce the costs to recapture the lost contribution margin. FRED: I think I have something to offer. We are about to embark on a new quality improvement program of our own. I have brought the following estimates of the current quality costs for this economy line. As you can see, these costs run about 16 percent of current sales. Thats excessive, and we believe that they can be reduced to about 4 percent of sales over time. LARRY: This sounds good. Fred, how long will it take for you to achieve this reduction? FRED: All these costs vary with sales level, so Ill express their reduction rate in those terms. Our best guess is that we can reduce these costs by about 1 percent of sales per quarter. So it should take about 12 quarters, or three years, to achieve the full benefit. Keep in mind that this is with an improvement in quality. MEGAN: This offers us some hope. If we meet the price immediately, we can maintain our market share. Furthermore, if we can ever reach the point of reducing the price below the 92 level, then we can increase our market share. I estimate that we can increase sales by about 10,000 units for every 1 of price reduction beyond the 92 level. Kevin, how much extra capacity for this line do we have? KEVIN: We can handle an extra 30,000 or 40,000 tables per year. Required: 1. Assume that Gaston immediately reduces the bid price to 92. How long will it be before the unit contribution margin is restored to 10, assuming that quality costs are reduced as expected and that sales are maintained at 100,000 units per year (25,000 per quarter)? 2. Assume that Gaston holds the price at 92 until the 4 percent target is achieved. At this new level of quality costs, should the price be reduced? If so, by how much should the price be reduced, and what is the increase in contribution margin? Assume that price can be reduced only in 1 increments. 3. Assume that Gaston immediately reduces the price to 92 and begins the quality improvement program. Now, suppose that Gaston does not wait until the end of the three-year period before reducing prices. Instead, prices will be reduced when profitable to do so. Assume that prices can be reduced only by 1 increments. Identify when the first future price change should occur (if any). 4. Discuss the differences in viewpoints concerning the decision to decrease prices and the short-run contribution margin analysis done by Helen, the controller. Did quality cost information play an important role in the strategic decision making illustrated by the problem?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?Heavenly Chocolates manufactures and sells quality chocolate products at its plant and retail store located in Saratoga Springs, New York. Two years ago, the company developed a web site and began selling its products over the Internet. Web-site sales have exceeded the company’s expectations, and management is now considering strategies to increase sales even further. To learn more about the web-site customers, a sample of 50 Heavenly Chocolate transactions was selected from the previous month’s sales. Data showing the day of the week each transaction was made, the type of browser the customer used, the time spent on the web site, the number of web pages viewed, and the amount spent by each of the 50 customers are contained in the file named Heavenly Chocolates. A portion of the data is shown in the table that follows: Heavenly Chocolates would like to use the sample data to determine whether online shoppers who spend more time and view more pages also spend more money during their visit to the web site. The company would also like to investigate the effect that the day of the week and the type of browser have on sales. Managerial Report Use the methods of descriptive statistics to learn about the customers who visit the Heavenly Chocolates web site. Include the following in your report. Graphical and numerical summaries for the length of time the shopper spends on the web site, the number of pages viewed, and the mean amount spent per transaction. Discuss what you learn about Heavenly Chocolates’ online shoppers from these numerical summaries. Summarize the frequency, the total dollars spent, and the mean amount spent per transaction for each day of week. Discuss the observations you can make about Heavenly Chocolates’ business based on the day of the week? Summarize the frequency, the total dollars spent, and the mean amount spent per transaction for each type of browser. Discuss the observations you can make about Heavenly Chocolates’ business based on the type of browser? Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the time spent on the web site and the dollar amount spent. Use the horizontal axis for the time spent on the web site. Discuss your findings. Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the number of web pages viewed and the amount spent. Use the horizontal axis for the number of web pages viewed. Discuss your findings. Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the time spent on the web site and the number of pages viewed. Use the horizontal axis to represent the number of pages viewed. Discuss your findings.
- Theta Metalwork Inc. entered into an exclusive contact with an entity involved in franchising out artisanal candy stores. It will be producing a new design for a metal commercial rack based on the lattter’s needs. The latter is negotiating for a fixed-price on demand ordering of the racks over five years. Theta gathered the following data shown. How much should Theta sell each rack so it can have a product profit margin of 28%?Theta Metalwork Inc. entered into an exclusive contract with an entity involved in franchising out artisanal candy stores. It will be producing a new design for a metal commercial rack based on the latter's needs. The latter is negotiating for a fixed-price on-demand ordering of the racks over five years. Theta gathered the following data shown. How much should Theta sell each rack so it can have a product profit margin of 28%?Theta Metalwork Inc. entered into an exclusive contract with an entity involved in franchising out artisanal candy stores. It will be producing a new design for a metal commercial rack based on the latter's needs. The latter is negotiating for a fixed price on demand ordering of the racks over five years. Theta gathered the following data shown in the image. How much should Theta sell each rack so that it can have a product profit margin of 28%?
- After conducting a market research study, Magnificent Manufacturing decided to produce a new interior door to complement its exterior door line. It is estimated that the new interior door can be sold at a target price of $270. The annual target sales volume for interior doors is 29,000. Magnificent has target operating income of 40% of sales. What are target sales revenues? A. $4,698,000 B. $3,132,000 C. $10,962,000 D. $7,830,000Tiffany Cosmetics manufactures, and sells a variety of makeup and beauty products. Thecompany has come up with its own patented formula for a new anti-aging cream The companypresident wants to make sure the product is priced competitively because its purchase will alsolikely increase sales of other products. The company anticipates that it will sell 400,000 units ofthe product in the first year with the following estimated costs:Product design and licensing $ 1,000,000Direct materials 1,800,000Direct manufacturing labor 1,200,000Variable manufacturing overhead 600,000Fixed manufacturing overhead 2,000,000Fixed marketing 3,000,000The company believes that it can successfully sell the product for $38 a bottle. The company’s targetoperating income is 40% of revenue. Calculate the target full cost of producing the 400,000 units.Does the cost estimate meet the company’s requirements? Is value engineering needed ?Vintage Weaponry is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen, and collectors. He is currently producing 80 flintlock muskets per month. Data are as follows: Sales price per unit $720 Variable cost per unit $700 Fixed costs per month $600 If Vintage expects to sell 50 units per month, how much is his margin of safety expressed in sales revenue?