Gethsemane Products Inc. is the leading manufacturer of cooking oil in the market. To cater to theincreasing demand, the executives have decided to invest in a better machinery that could increaseproduction output per machine hour. The engineers working for the plant gathered the following data forthe managers to consider and to choose from. The options below have the same acceptable productionoutput rate. The company's MARR is at 8%.SupplierСуprusEngineeringWorks Inc.P10,650,000DamascusAlphaMachineriesСо.Bros.CapitalInvestmentAnnualP11,000,000P11,800,000P8,000,000P9,100,000P9,100,000RevenueAnnualP6,100,000P5,750,000P5,590,000Expenses(excludingdepreciation)Useful Life6 yearsSalvage Value P900,0006 уearsP400,0005 yearsP890,000a. If the repeatability assumption is applied, which among the options above should bechosen using the present worth method?b. Construct an ATCF table for the chosen machinery from (a). Use the straight-linemethod of depreciation and a 38% tax rate

Repeatability Assumption is made while comparing alternatives with different useful lives . What we…

Answered: Gethsemane Products Inc. is the leading…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

See similar textbooks

Similar questions

If company A manufactures t-shirts and sells them to retailers for US$9.80 each.It has fixed costs of $2625 related to the production of the t-shirts, and the production cost perunit is US$2.30. Company B also manufactures t-shirts and sell them directly to consumers.The demand for its product is p = 15 −x 125, its production cost per unit is US$5.00and its fixed cost are the same as for company A.(i) Derive the total revenue function, R(x) for company A.(ii) Derive the total cost function, C(x) for company A.(iii) Derive the profit function, Π(x) for company A.(iv) Using a spreadsheet, create a table for showing x, R(x)?, C(x) for company Ain the domain x = 50, 100, 150, 200, 250, 300, 350, 400, 450.(v) Graph the functions from (d) above on the same axes.(vi) From your graph, determine the break-even level of output for company A.(vii) Derive the total revenue function, R(x) for company B.(viii) Derive the profit function,…
If company A manufactures t-shirts and sells them to retailers for US$9.80 each.It has fixed costs of $2625 related to the production of the t-shirts, and the production cost perunit is US$2.30. Company B also manufactures t-shirts and selll them directly to consumers.The demand for its product is p = 15 −x125 , its production cost per unit is US$5.00and its fixed cost are the same as for company A . (vii) Derive the total revenue function,R(x) for company B.(viii) Derive the profit function,Π(x) for company B.(ix) How many t-shirts must company B sell to in order to break-even.(x) How many t-shirts must company B sell to maximise its profit
If company A manufactures t-shirts and sells them to retailers for US$9.80 each.It has fixed costs of $2625 related to the production of the t-shirts, and the production cost perunit is US$2.30. Company B also manufactures t-shirts and selll them directly to consumers. The demand for its product is p = 15 − x/125 , its production cost per unit is US$5.00 i (i) Derive the total revenue function,R(x) for company B.(ii) Derive the profit function,Π(x) for company B.(ii) How many t-shirts must company B sell to in order to break-even.(iv) How many t-shirts must company B sell to maximise its profit.
2) Alcem Pte. Ltd. Is in the business of manufacturing cement. The company sets up a 1 million ton plant. The total cost of setting up the plant is $100 million. The cost of Raw material/ Labor etc for producing 1 ton of cement is $ 40. The price of Cement is $80 per ton. Assume a Capital Cost of 10% (which is also its opportunity cost) a) What is the breakeven quantity of cement for Alcem? 250,000 tons b) In the short run, below what price should Alcem shut down? $40 c) If Alcem produces and sells 1 million tonnes of Cement, what is the Economic Profit it is making? $30 million d) If there are no barriers to entry in this business what would you expect
Q.(i) . Selling Price :Rs. 12 Per UnitVariable Cost : 2/3 of SPFixed Cost :Rs. 40,000You are required to calculate:(a) Sales to earn profit of Rs. 8000.(b) Also show the BEPs in Breakeven chart. Q.(ii). Use the following information and explain that how the reduction in selling pricewould affect the MOS?Particulars Rs.Selling price per unit 40Material per unit 12Labour per unit. 8Variable Overheads per unit 4Total Fixed cost is Rs. 8, 000. Full capacity of the Plant is 5, 000 units.Reduced selling price is Rs. 32 per unit.
SITUATION3: Under the data collected from the office of Department of Transportation and DPWH over the last 5 years indicate that for each fatality, there are 40 non-fatal injury accidents ($1500 present cost each) and 300 property damage accidents ($2000 present cost each). What is the breakeven value of statistical Me (VSL) needed to justify a highway project if i is 8%? The death rate on a particular three-lane road is 8 per 100 million vehicle-miles. Adding a lane would reduce this to 5 per million, and other accidents would cost $1.5M per mile to build, and annual maintenance would be 3% of the first cost. Assume that the lane would last 40 years. The road carries 10000 vehicle per day. Use reduction factor of 3/8 for all accidents. (Non-CE students no need to answer this item).
If company A manufactures t-shirts and sells them to retailers for US$9.80 each.It has fixed costs of $2625 related to the production of the t-shirts, and the production cost per unit is US$2.30. Company B also manufactures t-shirts and selll them directly to consumers.The demand for its product is p = 15-x/ 125, its production cost per unit is US$5.00 and its fixed cost are the same as for company A . How many t-shirts must company B sell to maximise its profit?
What can you say about negative and positive gross margin in sensitivity analysis
An analysis tool applicable when the breakeven analysis does not fit the project situation. a. Multiplot O b. Riskplot Ос. Spiderplot O d. Webplot
6:08 PM ě 3.5KB/s 1l 82 4G+ 01:52:56 Remaining Multiple Choice If breakeven point is 100 units, each unit sells for P30, and fixed costs are P1,000, then on a graph the: total revenue line and the total cost line will intersect at P3,000 of revenue O total cost line will be zero at zero units sold revenue line will start at P1,000 total revenue line and the total fixed cost line will intersect at P3,000 of revenue 56 of 64 II レ

The ore of a gold mine in the province contains, on average, 0.5 ounce of gold per ton. Method A ofprocessing costs 150Php/ton and recovers 93% of the gold, while Method B costs only 120Php/tonand recovers 81% of the gold. If gold can be sold at 1,200/ounce, which method is better and by howmuch?a. Method A, by 43Phpb. Method A, by 42Phpc. Method B, by 42Phpd. Method B, by 43Php
1 Vehicle purchase. A student living in Lower Hutt is considering the purchase of a newvehicle. An electric vehicle (EV) can be purchased for $40,000 and has a running cost of $0.20per km. Alternatively, a (petrol) combustion vehicle (CV) can purchased for $25,000 and has arunning cost of $0.45 per km. The student is determined to make a decision which minimisesthe total cost depending on the number of kilometres that the vehicle will be used.(Here you should assume that the running costs also account for periodic costs such as mainte-nance, insurance, registration.)(a) Describe the decision and environment variables associated with this problem.(b) Determine the utility function R(D, X) which maps the outcomes to the total cost incurred.(c) Use a break-even analysis to determine the number of km for which the optimal decisiondiffers above and below this amount. Specifically, plot R(D, X), determine where thebreak-even point occurs and mark it clearly on your plot, then briefly…

SEE MORE QUESTIONS

Recommended textbooks for you

Managerial Economics: Applications, Strategies an…

Economics

ISBN:

9781305506381

Author:

James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:

Cengage Learning