Answer:
after tax cash flow = $29,512.32
Explanation:
the numbers are missing in this question:
purchase cost = $82,000
tax rate = 40%
selling price at end of year 4 = $32,000
MACRS 7 year depreciation schedule:
year % depreciation expense carrying value
1 14.29% $11,717.80 $70,282.20
2 24.29% $19,917.80 $50,364.40
3 17.49% $14,341.80 $36,022.60
4 12.49% $10,241.80 $25,780.80
after tax cash flow = $32,000 - [($32,000 - $25,780.80) x 40%] = $32,000 - $2,487.68 = $29,512.32
In Rooney Company, direct labor is $18 per hour. The company expects to operate at 12,000 direct labor hours each month. In January 2017, direct labor totaling $222,400 is incurred in working 12,600 hours.
Prepare a flexible budget report.
Answer:
Flexible budget Report for Rooney Company
Flexed budget Actual Variance
Labour hours 12,600 12,600
Labour cost($) 226,800 222,400 4,400 Favorable
Explanation:
A flexible budget is that which is prepared to reflect the actual activity level achieved.
It is useful for a control purpose; to compare the actual result to the expected performance. The expected performance is the the flexible budget which is a revised master budget.
Also it uses the assumptions of the static budget like standard costs and prices.
Flexed budget for labour = standard hour × actual labour cost
= $18× 12,600 = $ 226,800
Flexible budget Report for Rooney Company
Flexed budget Actual Variance
Labour hours 12,600 12,600
Labour cost($) 226,800 222,400 4,400 Favorable
Oriole Company uses flexible budgets. At normal capacity of 15000 units, budgeted manufacturing overhead is $120000 variable and $360000 fixed. If Oriole had actual overhead costs of $483000 for 18000 units produced, what is the difference between actual and budgeted costs
Answer:
$21,000 favorable
Explanation:
Given the above information,
Variable overhead rate = $120,000 / 15 units
= $8
Overhead variance = Real - Allocated
= $483,000 - (8 × 18,000 + $360,000 )
= $483,000 - $504,000
= $21,000 favorable
A manager is attempting to assess the probability of a recession ending in the next six months and its impact on expected profitability. The manager believes there is a 75 percent chance the recession will end in six months and profits will return to $400 million. However, there is a 25 percent chance the recession will not end in six months, resulting in a $5 million loss. The expected profits over the next six months are:
Answer:
Expected profit = $298.75 million
Explanation:
To calculate the expected return or expected profits, we will simply multiply the probability of each event by the return expected in that event and take a sum the answers. Thus, the expected profit can be calculated as follows,
Expected profit = Probability of recession ending * Profit if recession ends + Probability of recession not ending * profit or loss if recession does not end
Expected profit = 0.75 * 400 + 0.25 * -5
Expected profit = $298.75 million
As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D 0 = $0.80; P 0 = $22.50; and g = 8.00% (constant). Based on the DCF approach, what is the cost of common from reinvested earnings?
Answer:
The cost of common equity from reinvested earnings is 11.84%
Explanation:
The constant growth model of DDM or DCF approach is used to calculate the price of a stock today whose dividends are expected to grow at a constant rate forever. The model values the stock based on the present value of the expected future dividends form the stock.
The formula for price today under this model is,
P0 = D0 * (1+g) / (r - g)
Where,
P0 is price todayD0 is the dividend todayr is the cost of equityg is the growth rate in dividendsPlugging in the available values for all the variables, we can calculate the r or cost of common equity to be,
22.5 = 0.8 * (1+0.08) / (r - 0.08)
22.5 * (r - 0.08) = 0.864
22.5r - 1.8 = 0.864
22.5r = 0.864 + 1.8
r = 2.664 / 22.5
r = 0.1184 or 11.84%
Marston Manufacturing Company has two divisions, L and H. Division L is the company’s low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company’s high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division H is considering a project with an expected return of 12%. Should Marston Manufacturing Company accept or reject the project? Reject the project Accept the project On what grounds do you base your accept–reject decision? Division H’s project should be accepted, as its return is greater than the risk-based cost of capital for the division. Division H’s project should be rejected since its return is less than the risk-based cost of capital for the division.
Answer:
Should Marston Manufacturing Company accept or reject the project?
Marston C Company should reject the project because its expected return is lower than Division H's cost of capital.
Since the divisions' risk is so different, and probably their projects are also very different, the company should use different costs of capital to accept of reject the projects based on each division's cost of capital.
Imagine another situation where Division L is evaluating a project that yields 10%. If they used the company's WACC, then they should reject the project, but if they used the division's cost of capital, then they should accept the project (in this case I would recommend accepting it).
Explanation:
Division H's risk = 14%
Division L's risk = 8%
WACC = 11%
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The probability distributions of the risky funds are: Expected Return Standard Deviation Stock fund (S) 15 % 32 % Bond fund (B) 9 % 23 % The correlation between the fund returns is 0.15. What is the Sharpe ratio of the best feasible CAL?
Answer:
0.296875
Explanation:
Given the following :
Probability distribution of risky funds :
- - - - - - - - - - - - - - stock fund(S) - - bond fund(B)
Expected return - - - 15% - - - - - - - - - - 9%
Std - - - - - - - - - - - - - 32% - - - - - - - - - - 23%
Correlation between funds return = 0.15
Sure rate = 5.5%
To calculate the Sharpe ratio we use the formula :
Sharpe Ratio = (Expected Return of Investment - Risk Free Rate) / Standard Deviation of excess return of investment
For the stock fund :
Expected return = 15%
Risk free rate = market sure rate = 5.5%
Standard deviation = 32%
Sharpe ratio of stock fund :
(15% - 5.5%) / 32%
= 9.5% / 32%
= 0.296875
For Bond fund :
Expected return = 9%
Risk free rate = market sure rate = 5.5%
Standard deviation = 23%
Sharpe ratio of bond fund :
(9% - 5.5%) / 23%
= 3.5% / 23%
= 0.1521739
Therefore the Sharpe ratio of the best feasible CAL is the higher of the two ratios which is 0.296875
Who is responsible for responding to workflow(s) for equipment dispatch requests through the business workplace require An approving authority must approve
Answer:
Commander
Explanation:
GCSS-Army is short for Global Combat Support System-Army. The GCSS is a section of the United States Army that is fielded under the 11th Armored Cavalry Regiment. There are the GCSS Wave 1 and GCSS Wave 2. These two groups have different roles.
The role of the Commander falls under the Wave 2 functions where he is required to perform the roles of maintenance, dispatch, unit supply, and property book functions. The Wave 1 function is mostly about allowing access to support supply activity functions. The commanders in any organization they work with can screen several transactions and give approval for equipment dispatch.
Compare and contrast the following forms of business organization: sole proprietorship,general partnership,limited liability company,and corporation as to ease of formation,liability of owners,management,and tax implications.
Answer:
Find the explanation below.
Explanation:
1. Sole Proprietorship is owned by a single person or a married couple.
a. Ease of formation: This business is very easy to form because owners are not required to have legal documentation for the business to begin operation.
b. Liability of Owners: Owners are personally liable for the success or failure of the business. This means that they bear the cost of whatever debt or losses that are incurred in the business and can be sued for it.
c. Management: The owner makes all the management decisions that could affect the business. He sets the time when his business can be run as well as the prices for his products.
d. Tax Implications: They fill out Schedule C where they calculate the profit and loss from their business. They declare their income in Standard Form 1040 and they are subject to Self-employment tax.
2. General Partnership is a business agreement between to or more owners.
a. Ease of Formation: It is quite easy to start this business because little or no legal documentation is required to kick-start the business.
b. Liability: All partners are liable for debts and losses incurred in the business.
c. Management Decisions: The management decisions are made by the general partners. This affords them a measure of flexibility.
d. Tax implications: Income tax is not paid rather, a separate tax return form is filed.
3. Limited Liability Company: These business entities are run by two or more business partners.
a. Ease of Formation: It is relatively easy to form because it is governed by state rules and regulations which must be adhered to by the business owners.
b. Liability: There is a limited liability as just the business assets can be withheld when there is a legal battle. Personal assets of partners can not be withheld.
c. Management Decisions: There could be a member-managed LLC where members make decisions in the business or a manager-managed LLC one or two non-members are employed to manage the business and make business decisions therein.
d. Taxation: Taxation is done once and profits realized are passed through to the personal income taxes of the members.
4. Corporations are set up by a group of businesspeople.
a. Ease of Formation: They are not easy to form as proper documentation which is governed by state laws must be adhered to.
b. Liability: There is a limited liability as shareholders are not held accountable for the debts and losses of the corporation.
c. Management: There are directors of the corporation who are elected by the shareholders, They make decisions for the corporation. Business officers are also appointed.
d. Tax Implications: There are lots of taxation requirements for which the corporation might seek advice from a taxation advisor to prevent double taxation.
A newly issued 20-year maturity, zero-coupon bond is issued with a yield to maturity of 8% and face value $1,000. Find the imputed interest income in: (a) the first year; (b) the second year; and (c) the last year of the bond’s life.
Answer:
First Year $ 17.17
Second Year $ 18.53
Last Year $ 74.08
Explanation:
Computation to Find the imputed interest income in: (a) the first year; (b) the second year; and (c) the last year of the bond’s life
Imputed Interest
First step
Using this formula
Imputed interest=(Present Value /1+Yield to maturity)^Numberd of years
Year Years Remaining to Maturity Constant Yield Value ( 1 / 1.08)^n
0 20 (1/1.08)^20= $ 214.54
1 19 (1/1.08)^19=$ 231.71
2 18 (1/1.08)^18=$ 250.24
19 1 (1/1.08)^1=$ 925.92
20 0 (1/1.08)^0=$ 1,000
Second step is to find the Imputed interest for the first year, second year; and the last year of the bond’s life
Year Years Remaining to Maturity Constant Yield Value ( 1 / 1.08)^n =Imputed Interest
0 20 $ 214.54
1 19 $ 231.71 $17.17
($231.71-$214.54)= $17.17
2 18 $ 250.24 $18.53
($250.24-$231.71)=$18.53
19 1 $ 925.92
20 0 $ 1,000 $74.08
($1,000-$925.92) =$74.08
Therefore the imputed interest will be:
First Year $ 17.17
Second Year $ 18.53
Last Year $ 74.08
As assistant to the CFO of Boulder Inc., you must estimate the Year 1 cash flow for a project with the following data:
Sales revenues $13,000
Depreciation $4,000
Other operating costs $6,000
Tax rate 35.0%
What is the Year 1 cash flow?
a. $6,962
b. $5,950
c. $7,438
d. $5,177
e. $7,378
Answer:
$5,950
Explanation:
Boulder incorporation reported the following data for year 1
Sales revenue= $13,000
Depreciation= $4,000
Other operating costs= $6,000
Tax rate= 35%
The first step is to calculate the EBIT
= sales revenue-operating costs-depreciation
= $13,000-$6,000-$4,000
= $3,000
Therefore, the cash flow for year 1 can be calculated as follows
= 3,000×35/100
= 3,000×0.35
= 1,050
= 3,000-1,050
= 1,950
Cash flow= 4,000+1,950
= $5,950
Hence the cash flow for year 1 is $5,950
You short-sell 100 shares of Tuckerton Trading Co., now selling for $44 per share. What is your maximum possible gain, ignoring transactions cost
Answer:
$4,400
Explanation:
Calculation for the maximum possible gain, ignoring transactions cost
Using this formula
Maximum possible gain = Sale proceeds - Cost of purchasing the share
Let plug in the formula
Maximum possible gain = (100 shares *$44 per shares)- (100 shares *0) = 14000
Maximum possible gain=$4,400-0
Maximum possible gain=$4,400
Therefore the maximum possible gain, ignoring transactions cost will be $4,400
The IMF policies that accompany most IMF loans are typically: Multiple Choice expansionary in the short run. procyclical in the long run. contractionary in the long run. contractionary in the short run.
Answer:
contractionary in the long run
Explanation:
contractionary fiscal policy reduces spending and raises taxes. it contract the economy by reducing the amount of money that is available for businesses and for people to spend. it could reduce government expenditure or increase taxes or in other times do both. useful during inflation
You haven't been able to spend much time talking with your team lately, but your workload should be back to normal soon. When you checked in with your team today, several associates joked about being surprised to see you.
Assuming all option are possible, what would you be most and least likely to do?
Answer and Explanation:
I would most likely do this:
Explain the issue to the team and praise them for their work in my absence. I would let them know there would be more time soon. It is very essential to praise and appreciate these efforts by the associates since I have been absent for a while and do not know what efforts they have been putting in.
I would be least likely to:
Talk to the manager to explain this situation or propose that my some of my commitments are eased for me to have more time with my team
On January 1, Power House Co. prepaid the annual rent of $10,140. Prepare the journal entry to record this transaction.
Answer and Explanation:
The journal entry to record the given transaction is shown below:
Prepaid rent Dr $10,140
To Cash $10,140
(Being the prepaid annual rent paid in cash is recorded)
For recording this we debited the prepaid rent as it increased the assets and credited the cash as it reduced the cash so that the proper posting could be done
The production department is proposing the purchase of an automatic insertion machine. They have identified 3 machines and have asked the accountant to analyze them to determine the best average rate of return.
Machine A Machine B Machine C
Estimated Average Income $45,192.56 $64,695.00 $60,929.70
Average Investment $322,804.00 $215,650.00 $406,198.00
Select the correct answer.
a) Machine B or C
b) Machine A
c) Machine C
d) Machine B
Answer:
Option D is correct
Machine B is the best investment
Explanation:
The accounting rate of return is the average annual income expressed as a percentage of the average investment.
The simple rate of return can be calculated using the two formula below:
Accounting rate of return =
Annual operating income/Average investment × 100
To determine the the machine with the best return,we would compute the average annual return of all of the machines and then choose the machine with the highest return
This is done as follows:
Machine Working s Average annul rate
A 45,192.56/322,804.00 × 100 = 14.0%
B 64,695.00/215,650.00 × 100= 30.0%
C 60,929.70/406,198.00× 100 = 15.0%
Machine B is the best investment
perline, inc., has balance sheet equity of $6.2 million.At the same time, the income statement shows net income of $948600. The company paid dividends of $493272 and has 100000 shares of stock outstanding. If the benchmark PE ratio is 26, what is the target stock price in one year?
Answer:
The target stock price in one year is $264.75
Explanation:
We first calculate the ROE as below
ROE= Earnings / Book value of Equity
ROE= $948,600 / $6,200,000
ROE= 0.153
The payout ratio is:
b= Dividend / Net income
b = $493,272 / $948,600
b = 0.52
So the sustainable growth rate is:
g = ROE * (1-b)
g = 0.153 * (1-0.52)
g = 0.153 * 0.48
g = 0.07344
The earning in the first year are
EPS1 = $948,600 / 100,000 * (1 + 0.07344)
EPS1 = $9.486 * 1.07344
EPS1 = $10.1827
According to the benchmark PE ratio, the target stock price in one year is
Price = EPS1 * 26
Price = $10.1827 * 26
Price = $264.75
TB MC Qu. 9-100 The following labor standards have been ... The following labor standards have been established for a particular product: Standard labor-hours per unit of output 9.6 hours Standard labor rate $ 13.40 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 7,400 hours Actual total labor cost $ 96,200 Actual output 950 units What is the labor efficiency variance for the month
Answer:
Direct labor time (efficiency) variance= $23,048 favorable
Explanation:
Giving the following information:
Standard labor-hours per unit of output 9.6 hours
Standard labor rate $ 13.40 per hour
Actual hours worked 7,400 hours
Actual output 950 units
To calculate the direct labor efficiency variance, we need to use the following formula:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Standard quantity= 9.6*950= 9,120
Direct labor time (efficiency) variance= (9,120 - 7,400)*13.4
Direct labor time (efficiency) variance= $23,048 favorable
The GoT cups are a fast seller and you need to ensure that you have enough rolls of paper to fulfill demand. The first stage in the process is to determine the total cost of the current inventory ordering model. Given the following information, how many rolls should they order to minimize costs?H: $1.75 per unitD: 500 rolls per monthQ: 100 units ordered at a timeS: $25 per order
Answer:
EOQ = 414 rolls
Explanation:
In order to calculate the number of orders to minimize the cost, we should calculate that by using the Economic order quantity model.
DATA
Holding cost = $1.75/unit
Annual demand = 500 rolls x 12 = 6000 rolls
Ordering cost = $25
Formula
EOQ =[tex]\sqrt{\frac{2Cod}{Ch} }[/tex]
Where
Co = ordering cost
D = Annual demand
Ch = Holding cost
Solution
EOQ = [tex]\sqrt{\frac{2(6000)(25)}{1.75} }[/tex]
EOQ = [tex]\sqrt{\frac{300000}{1.75} }[/tex]
EOQ = 414 rolls
They should order 414 rolls to minimize the cost.
Answer:
119 units
Explanation:
The economic order quantity is the minimum amount of inventory that a seller must keep to demand and lower the holding cost. The ordering cost is $25 per order. Holding cost is $1.75 per unit. The total demand is 500 units per month. The economic order quantity that will minimize the cost of the GoT cups is
EOQ = [tex]\sqrt{\frac{2*Demand*ordering cost}{Holding cost} }[/tex]
EOQ is 119 units.
A publishing company sells 1,250,000 copies of certain books each year. It costs the company $1 to store each book for a year. Each time it must print additional copies, it costs the company $250 to set up the presses. How many books should the company produce during each printing in order to minimize its total storage and setup costs
Answer:
The Company should produce 25,000 books
Explanation:
The production size that minimizes total storage and setup costs is known as the optimum batch size.
Optimum batch size = √(2 × Annual Production Demand × Set up Cost) / Storage Cost per unit
= √ (2 × 1,250,000 × $250) / $1
= 25,000 books
Conclusion :
The Company should produce 25,000 books during each printing in order to minimize its total storage and setup costs.
Though not specifically cited in the producer's contract, the producer is expected to telephone prospects on the insurer's behalf to arrange sales appointments. This is an example of what kind of producer authority?
Answer:
Implied authority
Explanation:
Implied authority defines an authority with respect to agent that involves jurisdiction to perform the acts so that the objectives of the organization could be achieved. Also, it is a binding contract on other person behalf or company
Therefore according to the given situation, this is an example of implied authority
3. “The International Monetary Fund (IMF) and the World Bank are two institutions that have outlived their usefulness”. Do you agree?
Answer:
“The International Monetary Fund (IMF) and the World Bank"
Have they outlived their usefulness?
No.
The IMF and the World Bank have not outlived their usefulness. They remain very useful and relevant to our world today. The problem they have experienced stem in part from the neglect of their purposes, because of the near-absence of the grassroot touch. They can refocus on their purposes and reduce elitistism, and then they continue to be useful.
But, they cannot rediscover and concentrate on their purposes without the cooperation of member-countries. Recalcitrancy does not allow any organized institutions without police power to function at their best. Member-countries must learn to cooperate with these bodies to achieve their purposes. There is still global poverty ravaging the world population, even among the rich and developed countries of the world.
In most developing countries, their national governments are traditionally entrenched as anti-developmental. While they make long and meaningless speeches at world fora, back home they do not walk their talk and so often renege on their promises. This is why it seems that the impact of these world bodies are not being felt. National governments must be able to show responsibility to allow the effects of monetary policies and agreements to benefit the poor and the vulnerable.
Explanation:
The World Bank is an international body of the United Nations with about 189 member-countries. It works with developing countries to reduce poverty, increase access to wealth, and promote global prosperity. The IMF is responsible for ensuring that the international monetary system is operational and stable to ginger sustainable global economic growth.
f covered interest arbitrage opportunities do not exist, Group of answer choices interest rate parity holds. interest rate parity does not hold. interest rate parity holds, and arbitragers will be able to make risk-free profits. arbitragers will be able to make risk-free profits. interest rate parity does not hold, and arbitragers will be able to make risk-free profits.
Answer: interest rate parity holds
Explanation:
Covered interest arbitrage is a trading strategy that is used by an investor when the person whereby takes advantage of the differences in interest rate between two nations and invest in the currency that brings higher value.
If covered interest arbitrage opportunities do not exist, it simply means that interest rate parity holds.
Radoski Corporation's bonds make an annual coupon interest payment of 7.35% every year. The bonds have a par value of $1,000, a current price of $1,470, and mature in 12 years. What is the yield to maturity on these bonds
Answer:
The answer is 2.71 percent
Explanation:
The interest payment is annually.
N(Number of periods) = 12 years
I/Y(Yield to maturity) = ?
PV(present value or market price) = $1,470
PMT( coupon payment) = $73.5 ( [7.35 percent x $1,000)
FV( Future value or par value) = $1,000.
We are using a Financial calculator for this.
N= 12; PV = -1470 ; PMT = 73.5; FV= $1,000; CPT I/Y= 2.71
Therefore, the Yield-to-maturity of the bond annually is 2.71 percent
whatis the general termfor resources used by a business to produce good or services referred to as
Answer:
Factors of Production
The Treasury bill rate is 4% and the market risk premium is 7%.
Project Beta Internal rate of return %
P 1.0 14
Q 0 6
R 2.0 18
S 0.4 7
T 1.6 20
Required:
a. What are the project costs of capital for new ventures with betas of 0.75 and 1.75?
b. Which of the following capital investments have positive NPVs?
1. P
2. Q
3. R
4. S
5. T
Answer:
the answer is going to be 3. R
Describe various ways that knowledge management systems could help firms with sales and marketing or with manufacturing and production.
Answer:
Please see explanation below.
Explanation:
Knowledge management system is a system that allows sales people have quick and right information about a company's value proposition without having to wait for feedback from team members or someone else in the company. An advantage of knowledge management system is the ability to train many employees remotely or places where they may be needed.
Various ways ways that knowledge management system could help sales and marketing.
•Getting sales people on the same page. A company's sales team should understand the value propositions of their firm and how such values distinct them from the competitors. Each sales member should be acquitted with the knowledge management system which provides an easily accessible place for the company's value proposition. It also means that the values should readily be known and understood by everyone and are able to apply them according to how situations demands.
• Allowing to refine and deliver a better training process. This explain that knowledge management system can assist in terms of tracking questions frequently asked by sales people , contents mostly assessed by them and activities often carried out by top sales person that bring about the best result. All the information gathered including possible answers and training contents can then be loaded into the knowledge management system to help train new hires.
• Helping to track valuable insights and information. Prospects and customers usually give useful feed back which can assist a sales team and sales representative handles future sales opportunities. It is not enough capturing these information on the knowledge management system, they should be properly organized and accessible for other team members to benefit .
• Making it easier for sales and marketing to help each other. An important part of marketing team's task is to understand the challenges faced by the target audience and the questions prospects commonly ask so as to create relevant contents for them and also upload them on the knowledge management system portal. Such information should be often accessed by the team and then take better advantage of it.
Other areas knowledge management system could help sales and marketing are assistance with sales trend, high level decisions with regards to product orders, price negotiations . etc
A monopolist's maximized rate of economic profits is $1500 per week. Its weekly output is 500 units, and at this output rate, the firm's marginal cost is $32 per unit. The price at which it sells each unit is $42 per unit. At these profit and output rates, what are the firm's average total cost and marginal revenue?
Answer:
Average total cost = $39
Marginal revenue = $32 per unit
Explanation:
The computation of average total cost and marginal revenue is shown below:-
Average total cost = Selling price - (Economic profit ÷ Weekly output)
= $42 - ($1,500 ÷ 500)
= $42 - 3
= $39
Marginal revenue = Marginal cost
So,
Marginal revenue = $32 per unit
Therefore for computing the average total cost and marginal revenue we simply applied the above formula.
assume that autonomous consumption is $1610 billion and disposable income is $11,200 billion. Using the consumption function, calculate consumption expenditure
Answer: $9,226
Explanation;
The consumption function is;
Consumption = Autonomous consumption + (Marginal Propensity to consume * Disposable income)
Marginal Propensity to Consume;
=Increase in consumption expenditure/ Increase in Disposable income
= 680/1,000
= 0.68
Consumption = Autonomous consumption + (Marginal Propensity to consume * Disposable income)
= 1,610 + ( 0.68 * 11,200)
= $9,226
Harver company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 58000 units of RX5 follows. Direct materials and direct labor are 100% variable. Overhead is 70% fixed. An outside supplier has offered to supply the 58000 units of RX5 for 18.50 per unit. determine the total incremental cost making 58000 units of Rx5. Determine the total incremental cost of buying 58000 units of RX5. Should the company make or buy RX%
Answer:
Decision = Make
Explanation:
The incremental cost to buy and the incremental cost to make can be calculated as follows
DATA
Direct material = $4 (100% variable)
Direct labor = $8 (100% variable)
Overhead = $9 ( 70% fixed)
Total cost per unit = $21
Offered price = $18.5 per unit
Total units = 58,000
Solution
Incremental cost of making
Direct material ( 58,000 x $4) = $232,000
Direct labor (58,000 x $8) = $464,000
Overhead ( 58,000 x $9 x 30%) = $156,600
Total cost = $825,600
Incremental cost of buying
Total cost = No. of units x offered price
Total cost = 58,000 x $18.5
Total cost = $1,073,000
Decision: The company should make the product as the total cost to buy is $247,400 higher than the cost to make.
The cities of Tampa Bay and St. Petersburg, located on opposite sides of the Tampa Bay, are associated with what manufacturing industry
Answer:
The cities of Tampa Bay and St. Petersburg, are associated with the electronics and stationary manufacturing industry. For example office equipment, electronics, and optical products are manufactured in great quantities in both cities.
Explanation:
