Donna is working on the budgeted fixed-MOH rate for the upcoming year. Her company has recently purchased some new equipmen to increase its capacity. If all resources are in place and everything runs perfectly, the production department can generate 540 units per hour, 24 hours a day, 365 days a year. More realistically, however, the plant will shut down completely for 11 full days a year to observe national holidays, while maintenance and other down time will consume 2 hours of each day, with output being closer to 505 units per hour. Calculate Donna's theoretical and practical capacity for next year. If budgeted fixed-MOH costs are expected to be $2,760,000, what will the fixed-MOH rate be for the theoretical level? The practical level? (Round per unit answers to 2 decimal places, e.g. 15.25.) Theoretical level. Practical level Theoretical level Practical level $ $ Capacity Levels units units Budgeted Fixed-MOH Rate per units per units

Donna is working on the budgeted fixed-MOH rate for the upcoming year. Her company has recently purchased some new equipmen to increase its capacity. If all resources are in place and everything runs perfectly, the production department can generate 540 units per hour, 24 hours a day, 365 days a year. More realistically, however, the plant will shut down completely for 11 full days a year to observe national holidays, while maintenance and other down time will consume 2 hours of each day, with output being closer to 505 units per hour. Calculate Donna's theoretical and practical capacity for next year. If budgeted fixed-MOH costs are expected to be $2,760,000, what will the fixed-MOH rate be for the theoretical level? The practical level? (Round per unit answers to 2 decimal places, e.g. 15.25.) Theoretical level. Practical level Theoretical level Practical level $ $ Capacity Levels units units Budgeted Fixed-MOH Rate per units per units

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A new furnace for your small factory is being installed right now, will cost $46,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $4,000 a year. But it is far more fuel efficient than your old furnace and will reduce your consumption of heating oil by 4, 300 gallons per year. Heating oil this year costs $3 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0 and then reaps higher net cash flows from that investment at the end of years 1 - 20.) The discount rate is 10%. a. What is the net present value of the investment in the furnace? Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar. b. What is the IRR? Note: Do not…
A new furnace for your small factory is being installed right now, will cost $39,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $1,100 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 3,600 gallons per year. Heating oil this year costs $2 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0, and then reaps higher net cash flows from that investment at the end of years 1 – 20.). The discount rate is 10%. a. What is the net present value of the investment in the furnace? (Do not round intermediate calculations. Round your answer to the nearest whole dollar.) b. What is the IRR? (Do not round…
A new furnace for your small factory is being installed right now, will cost $38,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $1,200 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 3,500 gallons per year. Heating oil this year costs $2 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0 and then reaps higher net cash flows from that investment at the end of years 1 – 20.) The discount rate is 8%. What is the net present value of the investment in the furnace? Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar. What is the IRR? Note: Do not round…
A new furnace for your small factory is being installed right now, will cost $36,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $1,000 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 3,300 gallons per year. Heating oil this year costs $2 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0, and then reaps higher net cash flows from that investment at the end of years 1 – 20.). The discount rate is 6%. Please show answers in Excel with the formulas. A. What is the net present value of the investment in the furnace? (Do not round intermediate calculations. Round your answer to the nearest whole…
A new furnace for your small factory is being installed right now, will cost $46,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $4,000 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 4,300 gallons per year. Heating oil this year costs $3 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0, and then reaps higher net cash flows from that investment at the end of years 1 – 20.). The discount rate is 10%. a. What is the net present value of the investment in the furnace? (Do not round intermediate calculations. Round your answer to the nearest whole dollar.) $60,693 b. What is the IRR? (Do not…
A new furnace for your small factory is being installed right now, will cost $46,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $4,000 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 4,300 gallons per year. Heating oil this year costs $3 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0, and then reaps higher net cash flows from that investment at the end of years 1 – 20.). The discount rate is 10%. 1. What is the equivalent annual cost of the furnace? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 2. What is the equivalent annual savings derived from the…
A new furnace for your small factory is being installed right now, will cost $27,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $1,500 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 2,400 gallons per year. Heating oil this year costs $3 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0 and then reaps higher net cash flows from that investment at the end of years 1-20.) The discount rate is 8%. a. What is the net present value of the investment in the furnace? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What is the IRR? Note: Do not round…
A manufacturing firm has decided to plan for the purchase of a pickup truck several years from now. At that time, the company estimates that they will need $72,000 and has decided to set aside a uniform amount of money at the end of every month to save up for this need. It believes it is possible to set aside $1,180 per month at 9% compounded monthly interest. It wishes to know how long it will take to save $72,000 and how sensitive this result is to a 5% and 10% increase- or decrease in both the amount saved per month and in the interest rate., a) As a base case, determine how many months it will take to save $72,000. b) Construct a sensitivity graph to illustrate how the number of months change as a function of % change. c) This plan is most sensitive to which variable?
A new furnace for your small factory is being installed right now, will cost $33,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $1,000 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 3,000 gallons per year. Heating oil this year costs $2 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0, and then reaps higher net cash flows from that investment at the end of years 1 – 20.). The discount rate is 10%.
Crow Corporation, a company that specializes in precision metal fabrication, is conducting a study to determine if it should update equipment now or later. If the cost 2 years from now is estimated to be $260,000, how much can the company afford to spend now if its minimum attractive rate of return is 12% per year compounded monthly?
A medium-size consulting engineering firm is trying to decide whether it should remodel its office now or wait and do it one year from now. If thefirm does it now, the cost will be $38,000. The interest rate is 10% per year.a. What would the cost have to be one year from now to render the decision indifferent?b. If the cost one year from now is $41,600, should the firm remodel now or later?
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.