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Step 1: You are provided data on costs related to alternative of using neighboring factory off-time capacity to continue manufacturing during the rebuilding time. Classify the data into fixed and variable costs. Step 2: Additionally, calculate economic

Step 1: You are provided data on costs related to alternative of using neighboring factory off-time capacity to continue manufacturing during the rebuilding time. Classify the data into fixed and variable costs. Step 2: Additionally, calculate economic

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 4P: Halpern Companys controller prepared the following income statement and balance sheet at the end of...
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Step 1: You are provided data on costs related to alternative of using neighboring factory off-time capacity to continue manufacturing during the rebuilding time. Classify the data into fixed and variable costs.

Step 2: Additionally, calculate economic profit or loss of focusing entirely on rebuilding in comparison to alternative of rebuilding while continue with offsite production?

Johnson Lumber Financial Data ANNUAL REVENUE PRIOR TO THE FIRE įREVENUE EXPENSES $ es $ NET INCOME (EBIT) $ GROSS MARGIN % INET MARGIN% BENEFITS es 2 CONTINUE PRODUCTION OFF SITE 15,175,460 INSURANCE COVERS REBUILDING: 12,916,815 INSURANCE COVERAGE FOR EQUIPMENT 2,258,645 i 30%! 14.9%! ALTERNATIVES 1 STOP ALL PRODUCTION AND BUILD BACK THE MILL USING INSURANCE PAYOUT. TIME TO BUILD: 1 YEAR CUSTOMER RETENTION AFTER REBUILD: 55% FINANCIAL CONSEQUENCES ARISING FROM THE FIRE AT THE MILL SALES Less: Cost of sales @70% (Material and wages) GROSS MARGIN @30% Lease of space Lease of machinary Insurance property Insurance equipment damage Transportation No chip revenue Other Customer related expenes TOTAL OPERATING COSTS $30 per sq ft for 10000 sq ft per month $10,000 per month $10,000 per month $5,000 per month $12,000 per month $5000 per month NET INCOME (EBIT) Customer Retention after rebuilding $ $ $ $ $ $ $ $ $ es $ $ $ is 7,739,485 5,417,639 2,321,845 3,600,000 120,000 120,000 60,000 144,000 60,000 4,104,000 (1,782,155) 80% $ $ 5,000,000 3,000,000
Transcribed Image Text:Johnson Lumber Financial Data ANNUAL REVENUE PRIOR TO THE FIRE įREVENUE EXPENSES $ es $ NET INCOME (EBIT) $ GROSS MARGIN % INET MARGIN% BENEFITS es 2 CONTINUE PRODUCTION OFF SITE 15,175,460 INSURANCE COVERS REBUILDING: 12,916,815 INSURANCE COVERAGE FOR EQUIPMENT 2,258,645 i 30%! 14.9%! ALTERNATIVES 1 STOP ALL PRODUCTION AND BUILD BACK THE MILL USING INSURANCE PAYOUT. TIME TO BUILD: 1 YEAR CUSTOMER RETENTION AFTER REBUILD: 55% FINANCIAL CONSEQUENCES ARISING FROM THE FIRE AT THE MILL SALES Less: Cost of sales @70% (Material and wages) GROSS MARGIN @30% Lease of space Lease of machinary Insurance property Insurance equipment damage Transportation No chip revenue Other Customer related expenes TOTAL OPERATING COSTS $30 per sq ft for 10000 sq ft per month $10,000 per month $10,000 per month $5,000 per month $12,000 per month $5000 per month NET INCOME (EBIT) Customer Retention after rebuilding $ $ $ $ $ $ $ $ $ es $ $ $ is 7,739,485 5,417,639 2,321,845 3,600,000 120,000 120,000 60,000 144,000 60,000 4,104,000 (1,782,155) 80% $ $ 5,000,000 3,000,000
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