Maintenance & Repair= GH¢ 5,000• General Expenses at 100% ProductionAdministration= GH¢16,000Advertising DistributionGH¢40,000Salvage Value= 5% of Initial Fixed Capital Investment (CF)Service Life12 year%3!- Hurdle rate= 12%Tax Rate= 25%Assume the production rate is 60% the first two years, 80% the next four years and100% the remaining years, likewise the manufacturing cost and the general expenses.Determine:Payback Period (PBP)Return on Investment (ROI) Sales/RevenueGH¢5.00/kgProduction rate @ 100%= 375,000kg/yr• Total Initia) Fixed Capital Investment (CT) = GH¢850,000= 15% of Total Initial fixed Capital Investment%3D• Working Capital (Cw)(CT)Manufacturing Cost at 100% ProductionRaw Materials= GH¢40,000LabourGH¢30,000Electricity= GH¢15,000%3DWater= GH¢ 3,000%3DMaintenance & Repair= GH¢ 5,000• General Expenses at 100% ProductionAdministration= GH¢16,000

Before investing in new assets or investment, profitability is evaluated by using various methods…

Sales/Revenue GH¢5.00/kg • Production rate @ 100% = 375,000kg/yr • Total Initial Fixed Capital Investment (CT) = GH¢850,000 • Working Capital (Cw) = 15% of Total Initial fixed Capital Investment (Ст) Manufacturing Cost at 100% Production - Raw Materials GH¢40,000 Labour GH¢30,000 %3D Electricity - GH¢15,000 %3D - Water = GH¢ 3,000 Maintenance & Repair = GH¢ 5,000 • General Expenses at 100% Production Administration GH¢16,000

Sales/Revenue GH¢5.00/kg • Production rate @ 100% = 375,000kg/yr • Total Initial Fixed Capital Investment (CT) = GH¢850,000 • Working Capital (Cw) = 15% of Total Initial fixed Capital Investment (Ст) Manufacturing Cost at 100% Production - Raw Materials GH¢40,000 Labour GH¢30,000 %3D Electricity - GH¢15,000 %3D - Water = GH¢ 3,000 Maintenance & Repair = GH¢ 5,000 • General Expenses at 100% Production Administration GH¢16,000

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 3SEQ: Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of...

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