Determine cash flows Kauai Tools Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 7,400 units at $40 each. The new manufacturing equipment will cost $120,200 and is expected to have a 10-year life and a $9,200 residual value. Selling expenses related to the new product are expected to be 4% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis: Direct labor Direct materials Fixed factory overhead-depreciation Variable factory overhead Total $6.80 22.30 1.50 3.40 $34.00 Determine the net cash flows for the first year of the project, Years 2-9, and for the last year of the project. Use the minus sign to indicate cash outflows. Do not round your intermediate calculations but, if required, round your final answers to the nearest dollar. Kauai Tools Inc. Net Cash Flows Line Item Description Initial Investment Operating cash flows: Annual revenues Selling expenses Cost to manufacture Net operating cash flows Total for Year 1 Total for Years 2-9 (operating cash flow) Residual value Total for last year Year 1 Years 2-9 Last Year 0000 0.0000 00 0000 Check My Work 80 F3 F4 All work saved. a A F5 F6 F7 411 F8 A Previous Next>> Save and Exit Submit Assignment for Grading
Determine cash flows Kauai Tools Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 7,400 units at $40 each. The new manufacturing equipment will cost $120,200 and is expected to have a 10-year life and a $9,200 residual value. Selling expenses related to the new product are expected to be 4% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis: Direct labor Direct materials Fixed factory overhead-depreciation Variable factory overhead Total $6.80 22.30 1.50 3.40 $34.00 Determine the net cash flows for the first year of the project, Years 2-9, and for the last year of the project. Use the minus sign to indicate cash outflows. Do not round your intermediate calculations but, if required, round your final answers to the nearest dollar. Kauai Tools Inc. Net Cash Flows Line Item Description Initial Investment Operating cash flows: Annual revenues Selling expenses Cost to manufacture Net operating cash flows Total for Year 1 Total for Years 2-9 (operating cash flow) Residual value Total for last year Year 1 Years 2-9 Last Year 0000 0.0000 00 0000 Check My Work 80 F3 F4 All work saved. a A F5 F6 F7 411 F8 A Previous Next>> Save and Exit Submit Assignment for Grading
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 4E: Determine cash flows Natural Foods Inc. is planning to invest in new manufacturing equipment to make...
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Transcribed Image Text:Determine cash flows
Kauai Tools Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 7,400 units at $40 each. The new manufacturing equipment will cost $120,200 and is expected to have a 10-year life and a $9,200
residual value. Selling expenses related to the new product are expected to be 4% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis:
Direct labor
Direct materials
Fixed factory overhead-depreciation
Variable factory overhead
Total
$6.80
22.30
1.50
3.40
$34.00
Determine the net cash flows for the first year of the project, Years 2-9, and for the last year of the project. Use the minus sign to indicate cash outflows. Do not round your intermediate calculations but, if required, round your final answers to the nearest dollar.
Kauai Tools Inc.
Net Cash Flows
Line Item Description
Initial Investment
Operating cash flows:
Annual revenues
Selling expenses
Cost to manufacture
Net operating cash flows
Total for Year 1
Total for Years 2-9 (operating cash flow)
Residual value
Total for last year
Year 1
Years 2-9 Last Year
0000
0.0000
00 0000
Check My Work
80
F3
F4
All work saved.
a
A
F5
F6
F7
411
F8
A
Previous
Next>>
Save and Exit
Submit Assignment for Grading
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