ANSWER THE QUESTIONS. THANK YOU :) ĮUPSILON CO can produce any one of its three product lines with its present equipment set up. Base line costs to beincurred regardless of which product is produced, included depreciation of P 360,000 and the cost of running thefactory of P 300,000 per year.Additional data follow:ProductExpected revenueAdditional cost1114,350,000P2,550,0002222,900,000850,0003337,800,0005,825,000To maximize profits, UPSILON CO. should produceProduct 111bProduct 222Product 333dAny of the threeaXOTIC Corp., , incurred the following costs in October 2008: direct labor, P 120,000; factory overhead, P 108,000and direct materials purchases, P 160,000. Inventories are as follows:OpeningClosingFinished goodsWork in processP27,000P30,00061,50057,500Raw materials37,50043,500The cost of goods manufactured wasP 382,000bP 386,000P 388,000dP 443,500

Here in this question, we are required to choose between three alternatives. When there is various…

Answered: UPSILON CO can produce any one of its…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 18P

See similar textbooks

Similar questions

Venezuela Oil Inc. transports crude oil to its refinery where it is processed into main products gasoline, kerosene, and diesel fuel, and by-product base oil. The base oil is sold at the split-off point for $1,000,000 of annual revenue, and the joint processing costs to get the crude oil to split-off are $10,000,000. Additional information includes: Required: Determine the allocation of joint costs using the net realizable value method, rounding the sales value percentages to the nearest tenth of a percent. (Hint: Reduce the amount of the joint costs to be allocated by the amount of the by-product revenue.)
Morrill Company produces two different types of gauges: a density gauge and a thickness gauge. The segmented income statement for a typical quarter follows. Includes depreciation. The density gauge uses a subassembly that is purchased from an external supplier for 25 per unit. Each quarter, 2,000 subassemblies are purchased. All units produced are sold, and there are no ending inventories of subassemblies. Morrill is considering making the subassembly rather than buying it. Unit-level variable manufacturing costs are as follows: No significant non-unit-level costs are incurred. Morrill is considering two alternatives to supply the productive capacity for the subassembly. 1. Lease the needed space and equipment at a cost of 27,000 per quarter for the space and 10,000 per quarter for a supervisor. There are no other fixed expenses. 2. Drop the thickness gauge. The equipment could be adapted with virtually no cost and the existing space utilized to produce the subassembly. The direct fixed expenses, including supervision, would be 38,000, 8,000 of which is depreciation on equipment. If the thickness gauge is dropped, sales of the density gauge will not be affected. Required: 1. Should Morrill Company make or buy the subassembly? If it makes the subassembly, which alternative should be chosen? Explain and provide supporting computations. 2. Suppose that dropping the thickness gauge will decrease sales of the density gauge by 10 percent. What effect does this have on the decision? 3. Assume that dropping the thickness gauge decreases sales of the density gauge by 10 percent and that 2,800 subassemblies are required per quarter. As before, assume that there are no ending inventories of subassemblies and that all units produced are sold. Assume also that the per-unit sales price and variable costs are the same as in Requirement 1. Include the leasing alternative in your consideration. Now, what is the correct decision?
How would each of the following costs be classified if units produced is the activity base? a. Salary of factory supervisor ($120,000 per year) b. Straight-line depreciation of plant and equipment c. Property rent of $11,500 per month on plant and equipment
The production of a new product required Zion Manufacturing Co. to lease additional plant facilities. Based on studies, the following data have been made available: Estimated annual sales24,000 units Selling expenses are expected to be 5% of sales, and net income is to amount to 2.00 per unit. Required: 1. Calculate the selling price per unit. (Hint: Let X equal the selling price and express selling expense as a percentage of X.) 2. Prepare an absorption costing income statement for the year ended December 31, 2016. 3. Calculate the break-even point expressed in dollars and in units, assuming that administrative expense and factory overhead are all fixed but other costs are fully variable.
Any one of these different product lines can be produced by Bubble Mills, Inc., with the present equipment in one of the divisions. The annual depreciation of the equipment is P6,400; and the annual cost to operate the equipment, regardless of product line manufactured, is P4,600.Product A is expected to yield sales revenue of P71,000 a year with increased costs of production amounting to P42,000. Product B should yield sales revenue of P46,000 a year with increased costs of P15,000. Product C should yield sales revenue of P117,000 with increased costs of P96,000.How much is the sunk costs of the company? a• P19,600 b• P21,400 c• P26,000 d• P11,000
Any one of these different product lines can be produced by Bubble Mills, Inc., with the present equipment in one of the divisions. The annual depreciation of the equipment is P6,400; and the annual cost to operate the equipment, regardless of product line manufactured, is P4,600.Product A is expected to yield sales revenue of P71,000 a year with increased costs of production amounting to P42,000. Product B should yield sales revenue of P46,000 a year with increased costs of P15,000. Product C should yield sales revenue of P117,000 with increased costs of P96,000.How much is the sunk costs of the company?
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $384,000 with a 10-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 153,600 units of the equipment’s product each year. The expected annual income related to this equipment follows. Sales $ 240,000 Costs Materials, labor, and overhead (except depreciation on new equipment) 84,000 Depreciation on new equipment 38,400 Selling and administrative expenses 24,000 Total costs and expenses 146,400 Pretax income 93,600 Income taxes (40%) 37,440 Net income $ 56,160 If at least an 9% return on this investment must be earned, compute the net present value of this investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
A manufacturer has been offered a contract to manufacture a certain product that will utilize the waste materials from his present product. The new product will use 0.3kg of waste materials per unit which is presently sold by the company for P2.00 per kg. Other materials to be used will cost P0.80 per unit. Direct labor per unit will cost P2.30. The present overhead costs of the company amount to P380,000 plus 40% of the total for direct materials and direct labor costs per year. The buyer will pay the manufacturer per unit an amount equal to the increment costs plus P1.20 profit. Determine the selling price of the manufacturer per unit.
B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $432,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows. Sales of new product $ 270,000 Expenses Materials, labor, and overhead (except depreciation) 144,000 Depreciation—Equipment 36,000 Selling, general, and administrative expenses 27,000 Income $ 63,000 (a) Compute the annual net cash flow.
Copycat manufacturing company is subject to 30% income tax rate has the following operating data: Selling price per unit, P60; variable cost per unit, P22 and fixed cost of P504,000. Management plans to improve the quality of its product by replacing a component that costs P3.50, with a higher grade material that costs P5.50 and acquiring a P180,000 packing machine over a 10 year life with no estimated salvage value using the straight line method of depreciation. If the company wants to earn an after tax income of P201,600, how many units must it sell under the new proposal?
B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $408,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows. Sales of new product $ 255,000 Expenses Materials, labor, and overhead (except depreciation) 136,000 Depreciation—Equipment 34,000 Selling, general, and administrative expenses 25,500 Income $ 59,500 (a) Compute the annual net cash flow.(b) Compute the payback period.(c) Compute the accounting rate of return for this equipment
A company plans to manufacture a product and sell it for $3.00 per unit. Equipment to manufacture the product will cost $250,000 and will have a net salvage value of $12,000 at the end of its estimated economic life of 15 years. The equipment can manufacture up to 2,000,000 units per year. Direct labor costs are $0.25 per unit, direct material costs are $0.85 per unit, variable administrative and selling expenses are $0.25 per unit, and fixed overhead costs are $200,000, not including depreciation. If straight-line depreciation is used, what is the number of units that the company must manufacture and sell to yield a before-tax profit of 20%?

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Principles of Cost Accounting

Accounting

ISBN:

9781305087408

Author:

Edward J. Vanderbeck, Maria R. Mitchell

Publisher:

Cengage Learning

SWFT Comprehensive Volume 2019

Accounting

ISBN:

9780357233306

Author:

Maloney

Publisher:

Cengage

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Principles of Cost Accounting

Accounting

ISBN:

9781305087408

Author:

Edward J. Vanderbeck, Maria R. Mitchell

Publisher:

Cengage Learning

SWFT Comprehensive Volume 2019

Accounting

ISBN:

9780357233306

Author:

Maloney

Publisher:

Cengage

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Survey of Accounting (Accounting I)

Accounting

ISBN:

9781305961883

Author:

Carl Warren

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS