Delta Sonic, a chain of full service automotive detailers, is considering introducing a new 15-minute car wash and wax service at one of its Chicago locations. The company expects that sales from the new 15-minute service will be $145,000 per year. Delta Sonic currently offers a 1-hour wash/wax/detail service with annual sales of $267,500. While many of the 15-minute sales will be to new customers who, in the past, could not wait a full hour to have their car detailed, Delta Sonic estimates that 10% of their 1-hour sales will be lost as a result of existing customers switching to the new, faster service. The level of incremental sales associated with introducing the new 15-minute wash/wax service that should be used when analyzing this project is closest to O A. $171,750 O B. $14,500 O C. $145,000

Delta Sonic, a chain of full service automotive detailers, is considering introducing a new 15-minute car wash and wax service at one of its Chicago locations. The company expects that sales from the new 15-minute service will be $145,000 per year. Delta Sonic currently offers a 1-hour wash/wax/detail service with annual sales of $267,500. While many of the 15-minute sales will be to new customers who, in the past, could not wait a full hour to have their car detailed, Delta Sonic estimates that 10% of their 1-hour sales will be lost as a result of existing customers switching to the new, faster service. The level of incremental sales associated with introducing the new 15-minute wash/wax service that should be used when analyzing this project is closest to O A. $171,750 O B. $14,500 O C. $145,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10EB: Keleher Industries manufactures pet doors and sells them directly to the consumer via their web...

See similar textbooks

Similar questions

Delta Sonic, a chain of full service automotive detailers, is considering introducing a new 15-minute car wash and wax service at one of its Chicago locations. The company expects that sales from the new 15-minute service will be $160,000 per year. Delta Sonic currently offers a 1-hour wash/wax/detail service with annual sales of $290,000 While many of the 15-minute sales will be to new customers who, in the past, could not wait a full hour to have their car detailed, Delta Sonic estimates that 30% of their 1-hour sales will be lost as a result of existing customers switching to the new, faster service. The level of incremental sales associated with introducing the new 15-minute wash/wax service that should be used when analyzing this project is closest to OA. $87,000 OB. $160,000 OC. $247,000 OD. $73,000 OE. $48,000 II
FEX, a grocery store, is considering offering one-hour photo developing in their store. The firm expects that sales from the new one-hour machine will be $139,000 per year. FEX currently offers overnight film processing with annual sales of $90,000. While FEX expects that many of the one-hour photo sales will be to new customers, it also expects that most of the old customers will switch to the new one-hour machine. Specifically, FEX estimates that 75% of their current overnight photo customers will switch and use the one-hour service. Given these expectations, the level of incremental sales associated with introducing the new one hour photo service is closest to O $206,500 O $36,300 O $71,500 $139,000 O $121,800 O $94,800
Phlight Restaurant is considering a delivery service. The firm expects that sales from the new service will be $150,000 per year. Phlight currently offers a sit-down service with annual sales of $100,000. While many of the delivery sales will be to new customers, Phlight estimates that 60% of their current sit-down customers will switch and use the delivery service. The level of incremental sales associated with introducing the delivery service is closest to: Select one: a. $90,000 b. $150,000 c. $60,000 d. $120,000
Janet Garcia is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $8,700. The booth will be open 29 hours during the trade show. Ms. Garcia also plans to add a new product line, ProOffice, which will cost $190 per package. She will continue to sell the existing product, EZRecords, which costs $93 per package. Ms. Garcia believes that the salesperson will spend approximately 19 hours selling EZRecords and 10 hours marketing ProOffice. Required: a. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 86 units of EZRecords and 58 units of ProOffice. (Round "Cost per unit" answers to 2 decimal places.) EZRecords ProOffice Total cost of sales Cost per unit b. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 199 units…
A supermarket is planning on piloting a self-checkout system in one of its stores. It estimates that this requires an investment of about $500,000 to modify existing checkout lanes into self-checkout lanes. It also estimates that it will save $200,000 yearly in employee salaries by automating the checkout process. If the supermarket's MARR is at 10% per year compounded annually, determine the Conventional- payback period (in years) for this pilot.
Delta Sonic, a chain of full service automotive detailers, is considering introducing a new 15-minute car wash and wax service at one of its Chicago locations. The company expects that sales from the new 15-minute service will be $160,000 per year Delta Sonic currently offers a 1-hour wash/wax/detail service with annual sales of $290,000 While many of the 15-minute sales will be to new customers who, in the past, could not wait a full hour to have their car detailed, Delta Sonic estimates that 30% of their 1-hour sales will be lost as a result of existing customers switching to the new, faster service The level of incremental sales associated with introducing the new 15-minute wash/wax service that should be used when analyzing this project is closest to OA. $87,000 OB. $160,000 OC. $247,000 OD. $73,000 OE $48,000
Solar Shade Inc. currently sells 40,000 basic solar shade devices per year at $60,000 each, and 16,800 custom-made solar shade devices per year at $150,000 each. The company wants to introduce a new portable solar shade to fill out its product line; it hopes to sell 26,000 of these per year at $16,000 each. An independent consultant has determined that if the company introduces the new solar shades, it should boost the sales of its basic solar shades by 6,000 units per year, and reduce the sales of custom-made solar shades by 1,200 units per year. What is the amount to use as the annual sales figure when evaluating this project?
A supermarket is planning on piloting a self- checkout system in one of its stores. It estimates that this requires an investment of about $500,000 to modify existing checkout lanes into self-checkout lanes. It also estimates that it will save $200,000 yearly in employee salaries by automating the checkout process. If the supermarket's MARR is at 10% per year compounded annually, determine the payback period (in years) for this pilot.
A car manufacturer is considering the purchase of an industrial robot for assembling cars. An employee who does the same tasks as the robot would do costs the company $60,000 in wages and benefits this year. Those costs are expected to increase by 5% annually over the next 10 years. A robot would cost $150,000, which includes initial purchase, installation, and training costs. The robot would cost $25,000 to operate in its first year, and costs are expected to increase by $2,000 each year. The company expects to be able to sell the robot at the end of 10 years for a salvage value of $10,000. If the company can earn 5% on its funds, then should the company purchase the robot? Of course, use calculations to justify your answer.
Wendell's Donut Shoppe is investigating the purchase of an $42,800 donut-making machine with a six-year useful life. The new machine would reduce labor costs by $5,700 per year. In addition, it would allow the company to produce one new style of donut, resulting in the sale of 2,500 dozen more donuts each year. The company realizes a contribution margin of $1.50 per dozen donuts sold. Click here to view Exhibit 148-1 and Exhibit 148-2. to determine the appropriate discount factor(s) using tables. Required: 1. What are the new machine's total annual cash inflows? 2. What discount factor should be used to compute the new machine's internal rate of return? Note: Round your answer to 3 decimal places. 3. What is the new machine's internal rate of return? Note: Round your final answer to the nearest whole percentage. 4. In addition to the data given previously, assume the machine will have a $16,280 salvage value at the end of six years. Under these conditions, what is the internal rate of…
Wendell’s Donut Shoppe is investigating the purchase of a new $18,600 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $3,800 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,000 dozen more donuts each year. The company realizes a contribution margin of $1.20 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? (Round your final answer to the nearest whole dollar amount.) 2. What discount factor should be used to compute the new machine’s internal rate of return? (Round your answer to 3 decimal places.) 3. What is the new machine’s internal rate of return? (Round your final…
The Rapid Delivery Service is considering the expansion of its business into an afternoon retail delivery service. This would require an additional $34,000 in labor costs per month. Company-owned vehicles now used to make morning deliveries to local manufacturers could be used in the afternoons to make retail deliveries. However, it is estimated that an additional $10,900 would be required per month for gas, oil, and maintenance. It is further estimated that the retail delivery use of the trucks would be allocated 40% of the existing $13,900 fixed vehicle costs. What is the differential delivery cost per month for expanding into the retail delivery market?