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- The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include: Fixed costs (salaries, tools): 64,900 per year Variable costs (supplies): 1.35 per maintenance hour Estimated usage by: Actual usage by: Required: 1. Calculate a single charging rate for the Maintenance Department. 2. Use this rate to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year. 3. What if the Assembly Department used 4,000 maintenance hours in the year? How much would have been charged out to the three departments?A company is spending 70,000 per year for inspecting, 60,000 per year for purchasing, and 56,000 per year for reworking products. What is a good estimate of non-value-added costs? a. 126,000 b. 70,000 c. 56,000 d. 130,000Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000 for reworking products. A good estimate of nonvalue-added costs would be a. 70,000. b. 130,000. c. 40,000. d. 90,000. e. 100,000.
- The management of a private hospital is considering automating some back office functions. This would replace five personnel that currently cover three shifts per day, 365 days per year. Each person earns $35,000 per year. Company-paid benefits and overhead are 45% of wages. Money costs 8% after income taxes. Combined federal and state income taxes are 28%. Annual property taxes and maintenance are and 4% of investment, respectively. Depreciation is 15-year straight line. Disregarding inflation, how large an investment in the automation project can be economically justified?The Royal Victoria Hospital is evaluating new office equipment offered by three companies. Company A Company B Company C Cost $500 $600 $700 Annual benefit 130 115 100 End of useful life salvage value 0 250 180 Useful life (yrs) 5 10 15 The incremental rate of return between Company A and Company B is close to: Select one: a. 30% b. 25% c. 9.5% d. 8.5%3. St Barnabas Hospital is opening a satellite office. Your financial projections for the first year of operations are as follows:Revenues (10,000) $500,000Wages and Benefits $350,000Rent 8,000Depreciation 50,000Utilities 4,500Medical Supplies 70,000Administrative Supplies 20,000Assume that all cost are fixed except supply costs, which are variable. Furthermore, assume that the clinic must pay taxes at a 30 percent rate.a. Construct the clinics projected P & L statement.Insert your response here. b. What number of visit is required to break-even?Insert your response here. c. What number of visits is required to provide you with an after-tax profit of $100,000?Insert your response here.
- The organization you are employed by is investing in new machinery for their warehouse. The $1.2 million initial investment is made. In year 1, the annual maintenance expenditures are $42,000, and they rise by $3,000 annually after that. In the first year, the revenues are $118,000, and they rise by 6% annually. After the equipment's 12-year useful life, a $25,000 salvage value will be obtained.a) The rate of return company made during progressb) If the desired MARR is 5%, is this a good investment?You are considering two types of machines fora manufacturing process.◼◼ Machine A has a first cost of $75,200, and itssalvage value at the end of six years of estimatedservice life is $21,000. The operating costs ofthis machine are estimated to be $6,800 per year.Extra income taxes are estimated at $2,400 peryear.◼◼ Machine B has a first cost of $44,000, and itssalvage value at the end of six years’ service isestimated to be negligible. The annual operatingcosts will be $11,500.Compare these two mutually exclusive alternativesby the present-worth method at i = 13%New Pharm Corporation is a rapidlygrowing biotech company that has a required rate of return of 14%. It plans to build a new facility in SantaClara County. The building will take 2 years to complete. The building contractor offered New Pharm achoice of three payment plans, as follows: ■ Plan I: Payment of $175,000 at the time of signing the contract and $4,700,000 upon completion of thebuilding. The end of the second year is the completion date. ■ Plan II: Payment of $1,625,000 at the time of signing the contract and $1,625,000 at the end of each ofthe two succeeding years. ■ Plan III: Payment of $325,000 at the time of signing the contract and $1,500,000 at the end of each of thethree succeeding years. Q. Using the net present value method, calculate the comparative cost of each of the three payment plansbeing considered by New Pharm.
- New Pharm Corporation is a rapidlygrowing biotech company that has a required rate of return of 14%. It plans to build a new facility in SantaClara County. The building will take 2 years to complete. The building contractor offered New Pharm achoice of three payment plans, as follows: ■ Plan I: Payment of $175,000 at the time of signing the contract and $4,700,000 upon completion of thebuilding. The end of the second year is the completion date. ■ Plan II: Payment of $1,625,000 at the time of signing the contract and $1,625,000 at the end of each ofthe two succeeding years. ■ Plan III: Payment of $325,000 at the time of signing the contract and $1,500,000 at the end of each of thethree succeeding years. Q. Which payment plan should New Pharm choose? Explain.New Pharm Corporation is a rapidlygrowing biotech company that has a required rate of return of 14%. It plans to build a new facility in SantaClara County. The building will take 2 years to complete. The building contractor offered New Pharm achoice of three payment plans, as follows: ■ Plan I: Payment of $175,000 at the time of signing the contract and $4,700,000 upon completion of thebuilding. The end of the second year is the completion date. ■ Plan II: Payment of $1,625,000 at the time of signing the contract and $1,625,000 at the end of each ofthe two succeeding years. ■ Plan III: Payment of $325,000 at the time of signing the contract and $1,500,000 at the end of each of thethree succeeding years. Q. Discuss the financial factors, other than the cost of the plan, and the nonfinancial factors that shouldbe considered in selecting an appropriate payment plan.General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services Fixed $10,000,000 Variable cost per inpatient day 200 Charge (revenue) per inpatient day 1000 The hospital expects to have a patient load of 15,000 inpatient days next year. a. Construct the hospital’s base case projected P&L statement. b. What is the hospital’s breakeven point? c. What volume is required to provide a profit of $1,000,000? A profit of $500,000? d. Now, assume that 20 percent of the hospital’s inpatient days come from a managed care plan that requests a 25 percent discount from charges. Should the hospital agree to the discount proposal?
