Question 2Capital University, a midsized university in a capital city recently received an offer from BrainTrust TeachingServices to teach all of the first year accounting courses at the university. There are currently 10 sections of1st year accounting taught at Capital University. Cost per section are as follows:DescriptionCostProfessorsClassroom/buildingTeaching Assistants$20,000$4,000$2,000NotesHalf of these costs can be avoided by laying off staffThis space can not be used for other purposesAll costs can be avoidedAs well, it is estimated that fixed administrative costs are $1,000 per section.BrainTrust has proposed that they can teach all of the sections for a total cost of $105,000Should Capital accept this special offer? (include both qualitative and quantitative analysis)

If there is incremental income or cost savings from a special offer then, such a special offer…

Question 2 Capital University, a midsized university in a capital city recently received an offer from BrainTrust Teaching Services to teach all of the first year accounting courses at the university. There are currently 10 sections of 1st year accounting taught at Capital University. Cost per section are as follows: Description Cost Professors $20,000 $4,000 $2,000 Classroom/building Teaching Assistants Notes Half of these costs can be avoided by laying off staff This space can not be used for other purposes All costs can be avoided As well, it is estimated that fixed administrative costs are $1,000 per section. BrainTrust has proposed that they can teach all of the sections for a total cost of $105,000 Should Capital accept this special offer? (include both qualitative and quantitative analysis)

Question 2 Capital University, a midsized university in a capital city recently received an offer from BrainTrust Teaching Services to teach all of the first year accounting courses at the university. There are currently 10 sections of 1st year accounting taught at Capital University. Cost per section are as follows: Description Cost Professors $20,000 $4,000 $2,000 Classroom/building Teaching Assistants Notes Half of these costs can be avoided by laying off staff This space can not be used for other purposes All costs can be avoided As well, it is estimated that fixed administrative costs are $1,000 per section. BrainTrust has proposed that they can teach all of the sections for a total cost of $105,000 Should Capital accept this special offer? (include both qualitative and quantitative analysis)

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter2: Financial Statements And The Annual Report

Section: Chapter Questions

Problem 2.1AP

See similar textbooks

Similar questions

(Management Accounting) Mary is considering leaving her current position to open an ice cream shop. Mary's current annual salary is $77,000. Annual ice cream shop revenue and costs are estimated at $260,000 and $210,000, respectively. What is Mary's annual opportunity cost of starting the ice cream shop? A) $50,000 B) $77,000 C) $210,000 D) $260,000
Ma1. Jamal, Kareem, Rashid and Associates are in the process of evaluating its new client services for the business consulting division. •Estate Planning, a new service, incurred $180,000 in development costs and employee training. •The direct costs of providing this service, which is all labor, averages $30 per hour. ⚫ Other costs for this service are estimated at $450,000 per year. ⚫The current program for estate planning is expected to last for two years. At that time, a new law will be in place that will require new operating guidelines for the tax consulting. ⚫ Customer service expenses average $104 per client, with each job lasting an average of 500 hours. The current staff expects to bill 50,000 hours for each of the two years the program is in effect. Billing averages $46 per hour. What is estimated life-cycle operating income for the first year? A. $149,200 B. $319,200 C. $159,600 D. $339,600
5.5 You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows: Revenues (10,000 visits) $400,000 Wages and benefits 220,000 Rent 5,000 Depreciation 30,000 Utilities 2,500 Medical supplies 50,000 Administrative supplies 10,000 Assume that all costs are fixed, except supply costs, which are vari-able. Furthermore, assume that the clinic must pay taxes at a 30 per-cent rate. a.Construct the clinic’s projected P&L statement. b.What number of visits is required to break even? c.What number of visits is required to provide you with an after-tax profit of $100,000?
Question ENGINEERING ECONOMICS You want to launch a printing services business on campus. The initial cost to get the business running with a September 1st launch date would be $2,000. You estimate that the revenues would approximately offset your costs (e.g. paper, toner, etc.) in the first month of operation so that the monthly profit would be $0. Afterwards, you estimate that profits would increase by $80 each month until the end of the academic year (i.e. $80 profit in October, $160 profit in November, etc. until the end of April). Your annual MARR is 10%, compounded monthly. (a) Calculate the internal rate of return for your investment based on an 8 months study period. Select the appropriate IRR between options 1 to 4 below. (b) Suppose that you now consider another investment opportunity for your printing business services, also with monthly profits, and the internal rate of return of 3%. Is this alternative economically feasible based on IRR?
Question 1: Service Costing & ABC Part AAfrican Adventure Ltd offers a series of holiday packages aimed at families, seniors, and corporate groups. The financial controller is preparing for the annual board meeting and is concerned about the loss the business sustained in the past year. He has examined the profits for each of the three departments of the business and it seems that the corporate department is the source of the problem.The financial controller looked at the three packages offered by the corporate department to establish which are profitable or not profitable. The sales and direct cost of each package for the last year are as follows:South Africa Egypt NamibiaNumber of packages sold 10 20 10Number of people per package 5 6 8Revenue per person $18,000 $12,000 $14,000Direct cost per package: Tour leader $5,000 $12,000 $9,000 Tour assistant $2,000 $3,000 $6,000 Air travel $28,000 $30,000 $32,00 Accommodation $15,000 $26,000 $24,000 Equipment hires $4,000 0 $9,000 Meals…
Direction. Read and understand the given situation. Solve the problem using the given methods of evaluation. A man is considering P500,000 to open a semi-automatic auto washing business in a city of 400,000 population. The equipment can wash on the average of 12 cars per hour., using two men to operate it and to do small amount of hand work. The man plans to hire two men, in addition to himself and operate the station on an 8 hour basis, 6 days/week, 50weeks/year. He will pay his employees P25 per hour. He expects to charge P25.00 for a car wah out of pocket miscellaneous cost would be P8500/month. He would pay his employees for 2 weeks for vacation each year. Because of the length of his lease, he must write off his investment with 5 years. His capital now is earning 15% and he is employed at a steady job that pays P25,000/month. he desires a rate of return of at least 20% on his investment. Would you recommend the investment? Use the Present Worth Method
Direction. Read and understand the given situation. Solve the problem using the given methods of evaluation. A man is considering P500,000 to open a semi-automatic auto washing business in a city of 400,000 population. The equipment can wash on the average of 12 cars per hour., using two men to operate it and to do small amount of hand work. The man plans to hire two men, in addition to himself and operate the station on an 8 hour basis, 6 days/week, 50weeks/year. He will pay his employees P25 per hour. He expects to charge P25.00 for a car wah out of pocket miscellaneous cost would be P8500/month. He would pay his employees for 2 weeks for vacation each year. Because of the length of his lease, he must write off his investment with 5 years. His capital now is earning 15% and he is employed at a steady job that pays P25,000/month. he desires a rate of return of at least 20% on his investment. Would you recommend the investment? Use the following method Present Worth Method
Direction. Read and understand the given situation. Solve the problem using the given methods of evaluation.A man is considering P500,000 to open a semi-automatic auto washing business in a city of 400,000 population. The equipment can wash on the average of 12 cars per hour., using two men to operate it and to do small amount of hand work. The man plans to hire two men, in addition to himself and operate the station on an 8 hour basis, 6 days/week, 50weeks/year. He will pay his employees P25 per hour. He expects to charge P25.00 for a car wah out of pocket miscellaneous cost would be P8500/month. He would pay his employees for 2 weeks for vacation each year. Because of the length of his lease, he must write off his investment with 5 years. His capital now is earning 15% and he is employed at a steady job that pays P25,000/month. he desires a rate of return of at least 20% on his investment. Would you recommend the investment? Use the following method (Payback Period)
Social Media, Inc. (SMI) has two services for users. Toot!, which connects tutors with students who are looking for tutoring services, and TIX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results. Toot! Tix Total Users 15,500 22,100 37,600 Revenues $2,000,000 $2,080,000 $4,080,000 Engineering hours 10,4000 8,400 18,800 Engineering cost $ 881,000 $ 999,000 $1,880,000 Administrative costs…
Question #1 North Carolina Manufacturing Co. purchased a new industrial press and installed it in its main processing building. The press had a list price of $75,000. The seller agreed to allow a 12% discount because North Carolina paid cash. Taxes were 6% of the net purchase price. Delivery terms were FOB shipping point. Freight cost amounted to $1,500. North Carolina hired two workers to operate the press. The new employees spent their first two months of employment working on installation of the press. The new workers’ annual salaries are $24,000 per year (each). The cost of the company’s liability insurance policy increased by $4,340 per year as a result of the acquisition of the press. Modifications to the building to allow for installation of the new press cost $2,600. Costs incurred during installation and set-up (calibration, scrap, etc.) totaled $600. The press has an eight-year useful life and an expected salvage value of $8,400. Required Determine the amount to be…
3. A safety manager recommends spending $3,000 on an initiative to reduce accidents in an organization. Assume the company has a 3% profit margin. The manager believes the investment will take three years to recoup the expenses. What is the present value of the investment over the three-year period?
Social Media, Inc. (SMI) has two services for users. Toot!, which connects tutors with students who are looking for tutoring services, and TiX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results. Toot! TiX Total Users 15,500 22,100 37,600 Revenues $ 2,000,000 $ 2,080,000 $ 4,080,000 Engineering hours 10,400 8,400 18,800 Engineering cost $ 881,000 $ 999,000 $ 1,880,000 Administrative costs $ 1,504,000 The company is considering using a two-stage cost allocation system and wants to assess the effects on reported product profits. The company is considering using Engineering Hours and Users as the allocation base. Additional information follows. Toot! TiX Total Engineering hours 10,400 8,400 18,800 Users 15,500 22,100 37,600 Engineering-hour related administrative cost $ 199,280 User-related…