Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 55,000 units of RX5 follows. Direct materials $ 5.00 Direct labor 9.00 Overhead 10.00 Total costs per unit 24.00 Direct materials and direct labor are 100% variable. Overhead is 70% fixed. An outside supplier has offered to supply the 55,000 units of RX5 for $20.00 per unit. Required: 1. Calculate the incremental costs of making and buying component RX5.

Answers

Answer 1

Answer:

If the company makes the component, $165,000 will be saved.

Explanation:

Giving the following information:

Units production= 55,000 units

Production costs:

Direct materials $5

Direct labor $9

Avoidable Overhead= 3

Direct materials and direct labor are 100% variable.

An outside supplier has offered to supply the 55,000 units of RX5 for $20.00 per unit.

We need to determine the total cost of making in-house and buying.

We will take into account only the variable cost (avoidable cost).

Make in-house:

Total cost= 55,000*(5 + 9 + 3)= $935,000

Buy:

Total cost= 55,000*20= $1,100,000

If the company makes the component, $165,000 will be saved.


Related Questions

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

Answers

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

Florida Curtain Works is in the process of preparing its budget for next year. Cost of goods sold has been estimated at 60% of sales. Fabric purchases and payments are to be made during the month preceding the month of sale. Wages are estimated at 20% of sales and are paid during the month of sale. Other operating costs amounting to 25% of sales are to be paid in the month following the month of sales. Sales revenue is forecasted as follows:
Month Sales
February $440,000
March $450,000
April $480,000
May $500,000
June $510,000
What is the amount of fabric purchases during the month of March?
a. $480,000.
b. $336,000.
c. $288,000.
d. $300,000.

Answers

Answer:

Florida Curtain Works

1. Fabric purchases during the month of March:

c. $288,000.

Explanation:

a) Data and Calculations:

                Month Sales     Cost of Sales  Purchases     Wages  Others

February    $440,000       $264,000       $270,000    $88,000

March        $450,000          270,000         288,000      90,000   $110,000

April           $480,000          288,000         300,000      96,000     112,500

May           $500,000          300,000         306,000     100,000    120,000

June          $510,000         306,000                             102,000    125,000

b) Florida Curtain Works can prepare its budget for the next year by estimating the cost of goods to be sold, the purchases and payments for Fabric during the month based on trade terms, and the wages and other expenses to incur.  The budget helps its management to plan, prepare, exert efforts toward achieving the set targets, and analyze actual performance against budget.

Why do we need to deduct gain on sale of plant assets from net income to arrive at net cash flow from operating activities

Answers

Answer:

The money received from the sale of assets is included in the net cash flows from investing activities, that is why you must adjust net income by eliminating any gain or loss resulting from these transactions.  

Explanation:

E.g. net income = $50,000, and it includes a gain of $5,000 resulting from the sale of a truck. The truck had a book value of $15,000, but was sold at $20,000.

Net cash flows from operating activities:

Net income $50,000

Adjustments to net income:

- Gain on sale of asset ($5,000)

Net cash flow provided by operating activities $45,000

Net cash flows from investing activities:

Sale of truck $20,000

Net cash flow provided by investing activities $20,000

A stock has had returns of 12 percent, 19 percent, 21 percent, −12 percent, 26 percent, and −5 percent over the last six years. What are the arithmetic and geometric average returns for the stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Answers

Answer:

Average rate of return= 10.17 %

Geometric return = 9.23%

Explanation:

Geometric average return

This is compounded annual rate of return which is used to measure the performance of an asset over a certain number of years. It helps to measure the return generated by an investment taking into account the volatility .

Unlike the arithmetic average the geometric average gives an idea of the real rate taking into account of volatility

The formula below

Geometric Return =(1+r1) (1+r2) ...... (1+rn)^1/n

Geometric Average return =  

(1.12× 1.19× 1.21× 0.88× 1.26× 0.95)^(1/6) - 1 =0.09233168

Geometric return =0.0923 × 100= 9.23%

Geometric return = 9.23%

Average rate of return

The average return is the sum of the returns over the years dividend by the Numbers of returns

Average return = sum of return / No of returns

(12% + 19% + 21% + (12%) + 26% + (5%))/6 =10.17 %

Average rate of return= 10.17 %

Geometric return = 9.23%

For the current year ended March 31, Cosgrove Company expects fixed costs of $27,600,000, a unit variable cost of $805, and a unit selling price of $1,150.a. Compute the anticipated break-even sales (units).unitsb. Compute the sales (units) required to realize operating income of $5,175,000.units

Answers

Answer:

Instructions are below.

Explanation:

Giving the following information:

Fixed costs= $27,600,000

Unitary variable cost= $805

Unit selling price= $1,150

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 27,600,000 / (1,150 - 805)

Break-even point in units= 80,000 units

Desired income= $5,175,000

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (27,600,000 + 5,175,000) / 345

Break-even point in units= 95,000 units

Classify the following as a population or sample:

a. Two chimpanzees chosen to carry out genetic research.
b. Statistics 201 is a course taught at a university. Professor Rauch has taught nearly 1,500 students in the course over the past 5 years. You would like to know the average grade for the course.
c. Weather reports for each day of a month in a city for a study on that city's weather during that particular month.
d. To find how many books are published in one week by a famous publishing company.
e. To test a new drug produced by a biotech company.
f. To find the number of men and women working in an IT company with 600 people.
g. To estimate the average salary of doctors in California.

Answers

Answer:

Classification as Population or Sample

a. Sample

b. Population

c. Population

d. Population

e. Sample

f. Population

g. Population

Explanation:

The population defines the whole group, while the sample is a part of the population.  This means that the sample is less than the population.  In statistical research, it is not always possible to study the whole population, unless it is not large.  Most times, only the sample is studied and conclusions are then drawn about the population size based on the characteristics discovered about the sample size.

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.

Answers

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.

How are the three economic conditions (Growing, Stable, and Declining) called in the Decision Table?


Decision Alternatives


States of Nature


Pay-off


None of the above

Answers

Answer:

The anwer for your question is decision alternatives

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?

Answers

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

Who is responsible for responding to workflow(s) for equipment dispatch requests through the business workplace require An approving authority must approve

Answers

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.

Joe-Bob wants to buy a car and will need to take out a loan in order to make the purchase. His current monthly income is $3,500 per month. His mortgage payment is $900 per month, and his student loan payment is $350 per month. Note: You do not need to take taxes into consideration for this journal.

a. According to the affordability formulas given, can he afford to take out another loan?
b. When should he follow the affordability formulas?
c. In what cases should he not?
d. How could taking out the car loan impact his other priorities?

Answers

Answer:

A) according to the affordability formula Joe-Bob can take out another loan because his DTI is 36%

B) He should follow the affordability formula when he wants to take out  loans

C) He should not follow DTI if he isn't taking out loans  

D) Taking out a loan will negatively impact his other priorities if his DTI is very high or greater than 100%

Explanation:

using the affordability formula

The debt to income ratio = [tex]\frac{total debt}{gross income}[/tex]

total debt = mortgage payment + loan repayment = $900 + $350

= $1250

gross income = $3500

hence debt to income ratio =  1250 / 3500 = 0.3571 = 35.7%

A) according to the affordability formula Joe-Bob can take out another loan because his DTI is 36%

B) He should follow the affordability formula when he wants to take out  loans

C) He should not follow DTI if he isn't taking out loans  

D) Taking out a loan will negatively impact his other priorities if his DTI is very high or greater than 100%

a. According to the affordability formulas, Joe-Bob cannot afford to take out a car loan.  His current DTI without the auto loan is almost 36%.

b. Joe-Bob should follow the affordability formulas to guide his decisions in taking a new loan.

c. Joe-Bob does not need to follow the affordability formulas when his debt to income ratio (DTI) is far below 36%.  He can also avoid the affordability formulas when he has the prospect of increasing his monthly income.

d. If Joe-Bob takes out the car loan despite his poor rating on the affordability formulas, he may not afford to pay his bills for necessities.

Thus, Joe-Bob should not take on more loans now until he improves his income.  An automobile will require routine maintenance and some repairs, including fuelling.

Data and Calculations:

Current monthly income = $3,500

Monthly mortgage payment = $900

Monthly student loan payment = $350

Total current debts = $1,250 ($900 + $350)

The Affordability Formula (Current Debt Payment to Income Ratio) =

35.7% ($1,250/$3,500 x 100)

The Affordability Rule states that Joe-Bob should not spend more than 36% of his monthly income repaying loans.

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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?

Answers

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

Answers

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

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.

Answers

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

 

Hankins Corporation has 8.1 million shares of common stock outstanding, 300,000 shares of 4.1 percent preferred stock outstanding, par value of $100; and 185,000 bonds with a semiannual coupon rate of 5.5 percent outstanding, par value $2,000 each. The common stock currently sells for $57 per share and has a beta of 1.15, the preferred stock has a par value of $100 and currently sells for $99 per share, and the bonds have 18 years to maturity and sell for 107 percent of par. The market risk premium is 6.6 percent, T-bills are yielding 3.3 percent, and the company’s tax rate is 24 percent.A. What is the firm’s market value capital structure?B. If the company is evaluating a new investment project that has the same risk as the firm’s typical project, what rate should the firm use to discount the project’s cash flows?Solve for:A. DebtPreferred StockEquityB. Discount Rate

Answers

Answer:

common stocks = 8,100,000 x $57 = $461,700,000

preferred stocks = 300,000 x $99 = $29,700,00

debt = 185,000 x $2,000 x 1.07 = $395,900,000

total market value = $887,300,000

a)

capital structure:

common stocks = $461,700,000 / $887,300,000 = 52.03%

preferred stocks = $29,700,00 / $887,300,000 = 3.35%

debt = $395,900,000 / $887,300,000 = 44.62%

b) WACC = 7.48%

Re = 3.3% + (1.15 x 6.6%) = 10.89%

Cost of preferred stock = 4.1 / 99 = 4.14%

cost of debt = YTM = {55 + [(2,000 - 2,140)/36]} / [(2,000 + 2,140)/2] = 51.11 / 2,070 = 2.469 x 2 = 4.94%

WACC = (10.89 x 52.03%) + (4.14 x 3.35%) + (4.94 x 44.62% x 0.76) = 5.67% + 0.14% + 1.67% = 7.48%

Erosion costs. Fat Tire Bicycle Company currently sells bicycles per year. The current bike is a standard​ balloon-tire bike selling for ​$​, with a production and shipping cost of ​$. The company is thinking of introducing an​ off-road bike with a projected selling price of ​$ and a production and shipping cost of ​$. The projected annual sales for the​ off-road bike are . The company will lose sales in​ fat-tire bikes of units per year if it introduces the new​ bike, however. What is the erosion cost from the new​ bike? Should Fat Tire start producing the​ off-road bike? What is the erosion cost from the new​ bike?

Answers

Answer:

A. $1,725,000

B. Yes

Explanation:

Calculation for the erosion cost from the new​ bike

First step to find the erosion cost

Using this formula

Erosion cost =(Sales-Production and shipping cost )*Loss of sales units per year

Let plug in the formula

Erosion cost=(100-40)*7,500

Erosion cost=60*7,500

Erosion  cost= $450,000

Second step is to calculate for the Net annual Cash flow using this formula

Net annual cash flow= (Projected selling price-Production and shipping cost)*Projected annual sales-Erosion cost

Let plug in the formula

Net annual cash flow= (370-225)*15,000 - 450,000

Net annual cash flow =145*15,000-450,000

Net annual cash flow =2,175,000-450,000

Net annual cash flow=$1,725,000

B.Yes Fat Tire start producing the​ off-road bike

Because the net annual cash flow is positive

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?

Answers

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.

The standard overhead applied is based on the ______ level of activity multiplied by the predetermined overhead rate.

Answers

Answer: actual level

Explanation:

It should be noted that when determining the standard overhead cost rate, overhead costs have to be grouped into the fixed cost and the variable costs.

The standard overhead applied is based on the actual level of activity multiplied by the predetermined overhead rate.

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?

Answers

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

whatis the general termfor resources used by a business to produce good or services referred to as

Answers

Answer:

Factors of Production

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?

Answers

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 dividends

Plugging 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%

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

Answers

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

XYZ, Inc. has a beta of 0.8. The yield on a 3-month T-bill is 5%, and the yield on a 10-year T-bond is 7%. The market risk premium is 5.5%, and the return on an average stock in the market last year was 20%. What is the estimated cost of common equity using the CAPM? Show your work

Answers

Answer:

the estimated cost of common equity using the CAPM is 11.40 %.

Explanation:

Cost of Equity = Return on the Risk Free Security + Beta × Return on Market Portfolio

                       = 7.00 % +  0.8 × 5.5%

                       = 11.40 %

The estimated cost of common equity using the CAPM is 11.40 %.

Calculation of the cost of common equity;

Since the return on risk-free rate is 7%, beta is 0.8 and, the market risk premium is 5.5%

So here the cost of common equity should be

= Return on the Risk Free + Beta × Market risk premium

= 7.00 % +  0.8 × 5.5%

= 11.40 %

Hence, The estimated cost of common equity using the CAPM is 11.40 %.

Learn more about equity here: https://brainly.com/question/24300830

Dog Up! Franks is looking at a new sausage system with an initial cost of $445,000 that will last for five years. The fixed asset will qualify for 100 percent bonus depreciation in the first year, at the end of which the sausage system can be scrapped for $53,000. The sausage system will save the firm $139,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $25,000. If the tax rate is 23 percent and the discount rate is 11 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answers

Answer:

The NPV of this project is $494,385.54.

Explanation:

Note: See the attached excel file for the calculation of the NPV.

Net present value (NPV) of project refers to the the difference between the project's present value of its cash cash inflows and the present value of of its cash outflows over a specific period of time.

Since inflow is positive and outflow is negative, NPV can also be calculated by just sum of both the inflows and outflows.

The NPV of this project $494,385.54.

A share of stock is now selling for $110. It will pay a dividend of $8 per share at the end of the year. Its beta is 1. What do investors expect the stock to sell for at the end of the year? Assume the risk-free rate is 4% and the expected rate of return on the market is 15%. (Round your answer to 2 decimal places.)
Expected selling price $

Answers

Answer:

P1 = 118.5474 rounded off to $118.55

Explanation:

To calculate the price of the stock at the end of the year or P1, we first need to determine the required rate of return on the stock and the growth rate in dividends.

The required rate of return can be found using the CAPM equation. The formula for required rate of return under CAPM is,

r = rRF + Beta * (rM - rRF)

Where,

rRF is the risk free raterM is the return on market

r = 0.04 + 1 * (0.15 - 0.04)

r = 0.15 or 15%

Now we assume that the stock is a constant growth stock which means that the growth in dividends is expected to be constant throughout. The price of such a stock is found using the constant growth model of DDM. The formula for price today under the constant growth model is,

P0 = D1 / (r - g)

Where,

P0 is price todayD1 is expected dividend for the next periodg is the growth rate in dividends

Plugging in the available variables, g is,

110 = 8 / (0.15 - g)

110* (0.15 - g) = 8

16.5 - 110g = 8

g = (8 - 16.5) / -110

g = 0.077272 or 7.7272% rounded off to 7.73%

So to calculate the price at the end of the year or P1, we will use D2.

P1 = 8 * (1+0.0773) / (0.15 - 0.0773)

P1 = 118.5474 rounded off to $118.55

If you were on the Federal Reserve Board and you were concerned only with reducing high unemployment, you would implement_____________ monetary policy with a focus.

a. Short-term
b. Long-term
c. Contractionary
d. Expansionary

Answers

Answer: Expansionary; Short-term

Explanation:

If you were on the Federal Reserve Board and you were concerned only with reducing high unemployment, you would implement an expansionary monetary policy with a short-term focus.

Expansionary monetary policy has the effect of putting more money into the economy. As there is now more money in the economy, the expectation is that there will be more consumption spending as well as investment. More consumption because people have more money and more investment because interest rates reduce when there is an increased money supply. As there is now more investment as well as the need to satiate the increased demand, more companies can expand and employ people thereby reducing unemployment.

This should however be done with a short term view because expansionary monetary policy will lead to higher inflation in the longer term making business operations less profitable.

On January 1, Power House Co. prepaid the annual rent of $10,140. Prepare the journal entry to record this transaction.

Answers

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  

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

Answers

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.

you decided to get a summer job since you were 14 as a lifeguard. you have made 2000 each summer. you placed all your earning in your savings account each year. It's 5 years later and you want to determine how much interest you have made. use the calculator to determine this

Answers

Answer:

Determine of interest made by placing $2,000 earnings each summer in savings account each year:

Total Interest $1,265.95

at 4% interest per annum.

Explanation:

a) Data and Calculations:

1. Data:

Earnings each summer = $2,000

Period = 5 years

Interest Rate = 4%

2. Using online calculator:

V (Future Value) $11,265.95

PV (Present Value) $9,259.79

N (Number of Periods) 5.000

I/Y (Interest Rate) 4.000%

PMT (Periodic Payment) $2,000.00

Starting Investment $0.00

Total Principal $10,000.00

Total Interest $1,265.95

3. By placing all your earning in your savings account each year after 5 years, you will get an interest of $1,265.95 and a total future value of $11,265.95, having deposited $10,000 ($2,000 each for 5 years).

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.

Answers

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

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