Differential analysis for machine replacement
Boyer Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $60,000, the
- a. Prepare a differential analysis dated May 4 to determine whether to continue with ( Alternative 1) or replace (Alternative 2) the old machine. Prepare the analysis over the useful life of the new machine.
- b. Based only on the data presented, should the proposal be accepted?
- c. What are some of the other factors that should be considered before a final decision is made?

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Chapter 11 Solutions
Managerial Accounting
- I'm unsure of how to put this in a general journal and make a statement of reained earnings: Jul 1st The owner is concerned about unlimited liability being a sole proprietorship. Therefore, the company is converting to a corporation. The owner will receive 2,500 shares of $100 par common stock for the original investment. The balance in owner’s capital is $325,000. Jul 3rd Issued 30,000 shares of common stock, $10 par value. Jul 14 Declared a cash dividend of $1.50 per share for the outstanding shares of common stock. (Remember to utilize the correct payable account. Jul 31st Paid out the dividend in cash.arrow_forwardexplain the concept of Employee Stock-Purchase Plans, how do these work?arrow_forwardThe question below includes actual dates that must be used to determine the appropriate tax treatment of the transaction. The following information applies to a calendar year-end C corporation whose net operating loss was generated in the year ending December 31, 2019: Net operating loss (NOL) incurred in 2019 $(80,000) Taxable income in 2018 60,000 Taxable income in 2020 70,000 The corporation's taxable income in 2018 and 2020 is before consideration of any NOL carrybacks or carryforwards. In this situation, the corporation may utilize its 2019 NOL by offsetting: A. $56,000 of the 2020 taxable income and carrying forward $24,000 of the NOL to 2021 and succeeding periods. B. $48,000 of the 2018 taxable income and $12,000 of the 2020 taxable income. C. All of 2018 taxable income and $20,000 of 2020 taxable income. D. All of 2020 taxable income, with no carryforward allowed in succeeding periods.arrow_forward
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- Using the same case, calculate the independent effects of a 2 percent increase in Gross Margin, a 2 percent decrease in the Tax Rate, and a 5 percent decrease in Sales. Colossal Chemical Corporation Year Ended December 31, 2021 ($000,000 omitted) Base Case 2% Increase in Gross Margin 2% Decrease in Tax Rate 5% Decrease in Sales Sales $2,110 $ $ +A Cost of goods sold 1,456 Selling, general, and administrative 274 expense Depreciation 160 Research and 46 development Total costs and $1,936 $ 1A expenses Operating Income 174 Interest expense 39 Earnings before $135 $ $ Income Taxes Provision for Income Taxes Net Income 24 $ 111 $ 6A 6A +A 6Aarrow_forwardSolvearrow_forwardWhat does anti-dilutive mean? How might a security be anti-dilutive with respect to its potential impact on EPS?arrow_forward
- [The following information applies to the questions displayed below.] Delph Company uses job-order costing with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that 50,000 machine-hours would be required for the period’s estimated level of production. It also estimated $910,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $1.80 per machine-hour. Because Delph has two manufacturing departments—Molding and Fabrication—it is considering replacing its plantwide overhead rate with departmental rates that would also be based on machine-hours. The company gathered the following information to enable calculating departmental overhead rates: Molding Fabrication Total Machine-hours 20,000 30,000 50,000 Fixed manufacturing overhead cost $ 700,000 $ 210,000 $ 910,000 Variable manufacturing overhead cost per machine-hour $ 3.00 $ 1.00 During the year, the…arrow_forwardsolve the attached questionsarrow_forwardRespond the attached questionsarrow_forward
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