A company's returns department incurs annual overhead costs of $333,000 and budgets 9,000 returns per year. Management believes it has found a better way to package its products. As a result, the company expects to reduce the number of shipments that are returned due to damage by 6%. This is expected to reduce the department's annual overhead by $16,000. Compute the department's standard overhead rate per return (a) before the sustainability improvement and (b) after the sustainability improvement (Round your answers to 2 decimal places.) Before Sustainability Improvement After Sustainability Standard overhead rate per return

A company's returns department incurs annual overhead costs of $333,000 and budgets 9,000 returns per year. Management believes it has found a better way to package its products. As a result, the company expects to reduce the number of shipments that are returned due to damage by 6%. This is expected to reduce the department's annual overhead by $16,000. Compute the department's standard overhead rate per return (a) before the sustainability improvement and (b) after the sustainability improvement (Round your answers to 2 decimal places.) Before Sustainability Improvement After Sustainability Standard overhead rate per return

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 24% each of the last three years. Casey is considering a capital budgeting project requiring a $4,200,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company’s discount rate is 20%. The project would provide net operating income each year for five years as follows: Sales $ 4,100,000 Variable expenses 1,880,000 Contribution margin 2,220,000 Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs $ 770,000 Depreciation 840,000 Total fixed expenses 1,610,000 Net operating income $ 610,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What is the project’s net present value? 2. What is the project’s internal rate of return to the nearest whole…
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