MANAGERIAL ACCOUNTING FUND. W/CONNECT
5th Edition
ISBN: 9781259688713
Author: Wild
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 11, Problem 7BTN
Read the chapter opener about Limor Fried and her company. Adafruit Industries. Suppose Limor’s business continue to grow and she builds a massive new manufacturing facility and warehousing center to make her business more efficient and reduce costs.
Required
1. What are some of the management tools that Limor can use to evaluate whether the new manufacturing facility and warehousing center will be a good investment?
2. What information does Limor need to use the tools that you identified in your answer to part 1?
3. What are some of the advantages and disadvantages of each tool identified in your answer to part 1?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose you and a friend developed a new technology for home computer systems. However, you both need to raise a large amount of capital to build the production and support facilities to market the product successfully. Explain which of the business type would be best suited to help the company raise the necessary capital to begin production.
Below are four cases that you will have to solve
using Excel spreadsheets.
3rd Case
The company MEGAMAX SA is analyzing two possibilities to expand the market
, one of them is to choose to expand the plant to be able to produce a greater number
of products, the other option is to diversify production with different new products
to take advantage of the facilities that currently owns; The information and
projections you have to be able to carry out the analysis to make a decision are the
following:
PROJECT
Initial
investment
INCOME
EXPENSES
INCOME
Extension $810,000 EXPENSES
Diversification $900,000
It is requested:
Concept
Year 1
cash flows
5. Determine the internal rate of return.
6. Determine the present value.
7. Determine the recovery period.
8. Define which is the most viable project.
Year 2
cash flows
$1,000,000
$400,000
The discount rate for the project will be 12%, and investors propose a
MARR of 28%.
$550,000
$600,000
$1,100,000 $900,000
$400,000 $500,000
Year 3
cash flows…
Your firm is considering what to do with the current food distribution platform. The management might upgrade the platform (i.e., upgrading the new food distribution technology) or they can have a vendor construct a new one closer to the headquarters of the firm. What kind of projects are these?
Chapter 11 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
Ch. 11 - Prob. 1MCQCh. 11 - Prob. 2MCQCh. 11 - Prob. 3MCQCh. 11 - Prob. 4MCQCh. 11 - Prob. 5MCQCh. 11 - Prob. 1DQCh. 11 - What is capital budgeting?Ch. 11 - Identify four reasons that capital budgeting...Ch. 11 - Prob. 4DQCh. 11 - Prob. 5DQ
Ch. 11 - Prob. 6DQCh. 11 - Prob. 7DQCh. 11 - Prob. 8DQCh. 11 - Prob. 9DQCh. 11 - Prob. 10DQCh. 11 - Prob. 11DQCh. 11 - Prob. 12DQCh. 11 - Prob. 13DQCh. 11 - Prob. 1QSCh. 11 - Prob. 2QSCh. 11 - Prob. 3QSCh. 11 - Prob. 4QSCh. 11 - Prob. 5QSCh. 11 - Prob. 6QSCh. 11 - Prob. 7QSCh. 11 - Prob. 8QSCh. 11 - Prob. 9QSCh. 11 - Prob. 10QSCh. 11 - Prob. 11QSCh. 11 - Prob. 12QSCh. 11 - Prob. 13QSCh. 11 - Prob. 14QSCh. 11 - Prob. 15QSCh. 11 - Prob. 16QSCh. 11 - Prob. 1ECh. 11 - Exercise 24-2 Net present value P3 Refer to the...Ch. 11 - Prob. 3ECh. 11 - Prob. 4ECh. 11 - Prob. 5ECh. 11 - Prob. 6ECh. 11 - Prob. 7ECh. 11 - Prob. 8ECh. 11 - Prob. 9ECh. 11 - Prob. 10ECh. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prob. 13ECh. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Prob. 1PSACh. 11 - Most Company has as opportunity to invest in one...Ch. 11 - Prob. 3PSACh. 11 - Prob. 4PSACh. 11 - Prob. 5PSACh. 11 - Prob. 6PSACh. 11 - Prob. 1PSBCh. 11 - Prob. 2PSBCh. 11 - Prob. 3PSBCh. 11 - Prob. 4PSBCh. 11 - Prob. 5PSBCh. 11 - Prob. 6PSBCh. 11 - Prob. 11SPCh. 11 - Prob. 1BTNCh. 11 - Prob. 2BTNCh. 11 - Prob. 3BTNCh. 11 - Prob. 4BTNCh. 11 - Prob. 5BTNCh. 11 - Break into teams and identify four reasons that an...Ch. 11 - Read the chapter opener about Limor Fried and her...Ch. 11 - Prob. 8BTNCh. 11 - Prob. 9BTN
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Roald is the sales manager for a small regional manufacturing firm you own. You have asked him to put together a plan for expanding into nearby markets. You know that Roalds previous job had him working closely with many of your competitors in this new market, and you believe he will be able to facilitate the company expansion. He is to prepare a presentation to you and your partners outlining his strategy for taking the company into this expanded market. The day before the presentation, Roald comes to you and explains that he will not be making a presentation on market expansion but instead wants to discuss several ways he believes the company can reduce both fixed and variable costs. Why would Roald want to focus on reducing costs rather than on expanding into a new market?arrow_forwardGreen manufactures agricultural equipment and is planning to develop and launch a new fuel efficient tractor. Required: Discuss how the strategic management accounting techniques below could offer Green opportunities for improving performance and ways to seek to achieve cost reduction. Just-in-time and the Theory of Constraintsarrow_forwardConduct a viability study on a business opportunity on bottled water. Briefly explain what a viability study is and why it is important todo one when starting a business Explain about or describe the business opportunity you haveforeseen or heard about. (You could include that you havealready done a feasibility study). Conduct a viability study – explain step by step how you will dothis. Do a needs analysis - Assess if there is a need for the product orservice you want to offer Customer Profile - Find out about the people who are mostlikely to buy your products/services. Do a customer profile orcharacteristics of potential customers Mission and objectives – With the information obtained from theneeds analysis and customer profile, outline the mission andobjectives of the enterprise. Remember that the Objectivesshould be SMART(Specific, Measurable, Attainable, Realistic,Time-specific ) Calculate the market share – Once you are certain of themission and objectives of the…arrow_forward
- You have just started your first job as a trainee lawyer. Your supervisor tells you that the firm is considering an investment in a legal tech’ software licence to help make savings in the cost of case management. She asks you to think about the IRR such an investment might produce. QUESTION 4 What does IRR stand for? Explain what this means in practical terms and why it is useful to any firm. How might the firm use IRR to make a decision about the possible investment?arrow_forwardHow have the competitive, global, technological, andeconomic environments helped KlipTech to become asuccessful small business? Which of the above environments might pose the most challenges in the next fewyears, and why?arrow_forwardQuestion 1: Faheem Butt, the production manger of Ittefaq Foundries Ltd. (IFL) has just come to know that Crescent Engineering Ltd. (CEL) has recently introduced a new fabrication machine for medium size foundries. The new model is more efficient that the currently available models. Faheem thought that if the new machine were economically attractive, he could discuss with general manager of the company the possibility f replacing the existing machine, which his company had bought five years age. He therefore decided to collect the technical and financial information of the machine from CEL. Amjad the marketing manager of CEL, explained to Faheem the technical features of the machine, and tried to convince him that his company should go for the new model as it was for superior to their existing machine. Faheem asked him the financial details of buying the new model. He informed Amjad that the existing machine has annual operating cost of Rs. 600,000, Amjad stated that IFL would incur…arrow_forward
- You own a furniture manufacturing company. You are looking to expand into glass furniture and need to buy new manufacturing equipment to manufacture this type of furniture. You have researched many suppliers but have found that two machines will best suit your needs. The cost of machine 1 is $90,000, and the cost of machine 2 is $110,000. The estimated net profits the machines will generate are in the attached image. a)Compare the ARR for both machines and decide which machine you should buy. b)Critically evaluate the ARR technique in evaluating investment options.arrow_forwardPlease watch the Ted talk How business can plan for the road to recovery by Rich Lesser, CEO of Boston Consulting Group, and head of TED Chris Anderson discuss a three-phased approach: flatten, fight, future. Share your thoughts on what this three-phased approach might look like for manufacturing business. Many of the thoughts shared are for nonmanufacturing businesses. https://www.ted.com/talks/rich_lesser_how_businesses_can_plan_for_the_road_to_recoveryarrow_forwardCase Study please show all workingIn today's fast-paced business environment, decision making is a critical task for managers.Making the right decisions is vital to the success of a company, and it requires access torelevant information.Cari Pump (CP) Company manufactures water pumps. An important part of the pump is itselectronic component (EC). Cari Pump collects data with the following cost informationabout the costs of making ECs in 2019 and the expected costs in 2020: Current Costs (2019) Expected Costs (2020)Fixed manufacturing costFixed manufacturing overhead costs thatcan be avoided if ECs are not made 360,000 360,000Fixed manufacturing overhead costs of plantdepreciation, insurance, and administration thatcannot be avoided even if ECs are not made 850,000 850,000Variable manufacturing costsDirect material cost per EC $ 200 $ 190Direct manufacturing labor cost per EC 60 55Variable manufacturing cost per batch for setups,Materials handling, and quality control 2,000 1,800Cari…arrow_forward
- #15 Carni’s boss stated that after reviewing first quarter earnings, the company decided to invest in only one store in the city. After evaluating the performance of the store, the company will determine if it wants to increase its presence in the area. a) If you were Carni, what method of evaluation would you use to recommend a site for a new video store? b) Explain how you would determine which site to invest in.arrow_forwardPlease answer in your own words After the pandemic ended, most of us are back to in-person work. However, the remote work and study format has a long-term impact on our society and economy. Also, with the introduction of AI-Generated Content like ChatGPT, our life and labor markets will change. Please discuss how the above one or two new norms will influence your investment decisions, such as which companies and/or industries will benefit from the change, and how you should change your investment strategy (i.e., investing in more stocks or bonds or real estate, investing in which companies, sectors, and industries).arrow_forward1 Jennifer Baskiter is president and CEO of Plants&More.com, an Internet company that sells plants and flowers. The success of her startup Internet company has motivated her to expand and create two divisions. One division focuses on sales to the general public and the other focuses on business-to-business sales to hotels, restaurants, and other firms that want plants and flowers for their businesses. She is considering using return on investment as a means of evaluating her divisions and their managers. She has hired you as a compensation consultant. What issues or concerns would you raise regarding the use of ROI for evaluating the divisions and their managers? (You may select Askarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Why do we need accounting?; Author: EconClips;https://www.youtube.com/watch?v=weCXE2wIl90;License: Standard Youtube License