1. Compare the costs of Version 1 POS and Version 2 POS. Consider the cumulative resultsfor the three years together, ignoring the time value of money and income taxes. 2. Advise Mr. Williams on the factors that determine whether a revenue or cost item is relevantfor management at Carib Systems and indicate whether he should accept the proposal. Don Williams is General manager of Carib Systems who received a proposal to replace theVersion 1 with Version 2 Point of Sales (POS) equipment at the company. Williams collectsdata about the proposal on Version 1 and Version 2 as follows:Version 1 POSVersion 2 POSOriginal cost$425,000$170,000Useful life5 years3 уearsCurrent age2 уearsO yearsRemaining useful life3 уears3 усarsAccumulated depreciation$195,000Not purchased yetCurrent book value$230,000Not purchased yetCurrent disposal value (in cash)$120,000Not purchased yetFinal disposal value (in cash 3 years from now)$0$0Annual POS cash operating costsS60,000$20,000Annual revenues$1,250,000$1,250,000Annual non POS related operating costs$920,000$920,000

(1). Cost for 3 years Particulars Version 1 pos version 2 pos Purchase cost 170000 Sale…

1. Compare the costs of Version 1 POS and Version 2 POS. Consider the cumulative results for the three years together, ignoring the time value of money and income taxes. 2. Advise Mr. Williams on the factors that determine whether a revenue or cost item is relevant

1. Compare the costs of Version 1 POS and Version 2 POS. Consider the cumulative results for the three years together, ignoring the time value of money and income taxes. 2. Advise Mr. Williams on the factors that determine whether a revenue or cost item is relevant

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 1QE

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Required Information [The following information applies to the questions displayed below.] UR Safe Systems Installs home security systems. Two of its systems, the ICU 100 and the ICU 900, have these characteristics: Design Specifications Video cameras Video monitors Motion detectors Floodlights Alarms Wiring Installation 1,050 feet 21 hour The ICU 100 sells for $860 Installed, and the ICU 900 sells for $1,570 Installed. 1. Current profit margin 2. ICU 100 2 2 3 1 5 650 feet 11 hour Required: 1. What are the current gross profit margin percentages on both systems? 2. UR Safe's management believes that it must drop the price on the ICU 100 to $800 and on the ICU 900 to $1,440 to remain competitive in the market. Recalculate gross profit margin percentages for both products at these price levels and then compute the target cost needed for each product to maintain the current gross profit margin percentages. Profit margin Target cost (For all requirements, round your percentage answers to…
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