Light emitting diode (LEDs) light bulbs have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $.35 and lasts for 1,000 hours. A 15-watt LED, which provides the same light, costs $2.90 and lasts for 12,000 hours. A kilowatt hour of electricity costs $.111. A kilowatt-hour is 1,000 watts for 1 hour. However, electricity costs actually vary quite a bit depending on location and user type. An industrial user in West Virginia might pay $.04 per kilowatt-hour whereas a residential user in Hawaii might pay $.25.. You require a return of 9 percent and use a light fixture 500 hours per year. what is the break even cost per kilowatt-hour

Light emitting diode (LEDs) light bulbs have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $.35 and lasts for 1,000 hours. A 15-watt LED, which provides the same light, costs $2.90 and lasts for 12,000 hours. A kilowatt hour of electricity costs $.111. A kilowatt-hour is 1,000 watts for 1 hour. However, electricity costs actually vary quite a bit depending on location and user type. An industrial user in West Virginia might pay $.04 per kilowatt-hour whereas a residential user in Hawaii might pay $.25.. You require a return of 9 percent and use a light fixture 500 hours per year. what is the break even cost per kilowatt-hour

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 8EB: Shonda & Shonda is a company that does land surveys and engineering consulting. They have an...

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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?
Light emitting diode (LEDs) light bulbs have become required in recent years, but do they make financial sense? Suppose a typical 60 watt incandescent light bulb costs $.48 and lasts for 1, 000 hours. A 15 watt LED, which provides the same light, costs $3.55 and lasts for 12, 000 hours. A kilowatt hour of electricity costs $.124. A kilowatt-hour is 1,000 watts for 1 hour. However, electricity costs actually vary quite a bit depending on location and user type. An industrial user in West Virginia might pay $.04 per kilowatt-hour whereas a residential user in Hawaii might pay $.25. You require a return of 10 percent and use a light fixture 500 hours per year. What is the break even cost per kilowatt-hour? (Do not round intermediate calculations and round your answer to 6 decimal places, e. g., 32.161616.)
Light emitting diodes (LED) light bulbs have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $.55 and lasts 1,000 hours. A 15-watt LED, which provides the same light, costs $3.90 and lasts for 12,000 hours. A kilowatt-hour of electricity costs $.131. A kilowatt-hour is 1,000 watts for 1 hour. If you require a return of 11 percent and use a light fixture 500 hours per year, what is the equivalent annual cost of each light bulb? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
1. A recently retired professor, Melinda Marketing, plans to establish the Hot-Air FanCompany and manufacture circulating fans. She estimates the fixed cost of operations tobe $357,500 annually. The variable cost of producing the fans is forecasted to be $85 perunit.a. How many fans must be sold to break even if the fans are priced at $150?b. If Hot-Air sells 6,000 fans, what will be the EBIT?c. If Hot-Air sells 6,000 fans and has interest expense of $8,125, what is Hot-Air’stimes-interest-earned? Hot-Air does not have any nonoperating expenses.d. If the fans are priced at $150, what is Hot-Air’s breakeven sales? 2. Vapor Lock Motors’ EBIT is $7,000,000, the company’s interest expense is $2,000,000, and its tax rate is 40 percent. Vapor Lock’s beta is 1.5. a. What is Vapor Lock’s DFL? b. If Vapor Lock were able to grow its EBIT by 50%, what would be the percentage increase in net income? c. If Vapor Lock were able to grow its EBIT by 50%, what would be the resulting net income? 3. A…
Network Systems is introducing a new network card. Suppose Network Systems knows its fixed costs are $600,000, its variable costs are $500 per card, and it must sell 15,000 cards to break even the first year. What is the minimum price per unit it should charge
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Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options:A. Purchase the machine it is currently renting for $150,000. This machine will require $23,000 per year in ongoing maintenance expenses.B. Purchase a new, more advanced machine for $265,000. This machine will require $19,000 per year in ongoing maintenance expenses and will lower bottling costs by $13,000 per year. Also, $38,000 will be spent upfront training the new operators of the machine.Suppose the appropriate discount rate is 8% per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as is the rental of the machine. Assume also that the machines will be depreciated via the straight-line method over seven years and that they have a ten-year life with a negligible salvage value. The marginal corporate tax rate is 30%. Should Beryl's Iced Tea…
Beryl's Iced Tea currently rents a bottling machine for $52,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options: a. Purchase the machine it is currently renting for $150,000. This machine will require $23,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $255,000. This machine will require $15,000 per year in ongoing maintenance expenses and will lower bottling costs by $12,000 per year. Also, $35,000 will be spent upfront training the new operators of the machine. Suppose the appropriate discount rate is 8% per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as is the rental of the machine. Assume also that the machines will be depreciated via the straight-line method over seven years and that they have a ten-year life with a negligible salvage value. The corporate tax rate is 20%. Should Beryl's Iced Tea…
Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options: a. Purchase the machine it is currently renting for $150,000. This machine will require $21,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $255,000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $13,000 per year. Also, $36,000 will be spent upfront training the new operators of the machine. Suppose the appropriate discount rate is 8% per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as is the rental of the machine. Assume also that the machines will be depreciated via the straight-line method over seven years and that they have a ten-year life with a negligible salvage value. The corporate tax rate is 20%. Should Beryl's Iced…
A set of four “100-year,” sixty (60) watt light bulbs costs $24.95. If H equals the annual number of hours the bulb is used, each bulb provides 100Hhours of light, and the efficiency of each bulb is 80%. A set of four, sixty (60) watt standard bulbs costs $2.60. Each standard bulb provides H hours of light and the efficiency of each bulb is 95%. If the cost of electricity is $0.0574/kWh, how many hours of operation each year will make the costs of the two types of bulb breakeven? Your personalMARR is 5% per year. Assume repeatability. State other realistic assumptions you must make.
Madetaylor Inc. manufactures financial calculators. The company is deciding whether to introduce a new calculator. This calculator will sell for $140. The company feels that sales will be 18,000, 25,000, 24,000, 24,000, and 22,000 units annually for five years. Variable costs will be 20% of sales, and fixed costs are $500,000 annually. The firm hired a marketing team to analyze the product's viability, and the marketing analysis cost $500,000. The company plans to manufacture and store the calculators in a vacant warehouse. Based on a recent appraisal, the warehouse and the property are worth $4 million after tax. If the company does not sell the property today, it will sell it five years from today at the currently appraised value. This project will require an injection of net working capital at the onset of the project, $850,000. The firm recovers the net working capital at the end of the project. The firm must purchase equipment for $6,000,000 to produce the new calculators. The…
Madetaylor Inc. manufactures financial calculators. The company is deciding whether to introduce a new calculator. This calculator will sell for $140. The company feels that sales will be 18,000, 25,000, 24,000, 24,000, and 22,000 units annually for five years. Variable costs will be 20% of sales, and fixed costs are $500,000 annually. The firm hired a marketing team to analyze the product's viability, and the marketing analysis cost $500,000. The company plans to manufacture and store the calculators in a vacant warehouse. Based on a recent appraisal, the warehouse and the property are worth $4 million after tax. If the company does not sell the property today, it will sell it five years from today at the currently appraised value. This project will require an injection of net working capital at the onset of the project, $850,000. The firm recovers the net working capital at the end of the project. The firm must purchase equipment for $6,000,000 to produce the new calculators. The…