one-hour machine will be $150,000 per year. XYZ currently offers overnight film processing with annual sales of $100,000. While many of the one-hour photo sales will be to new customers, XYZ estimates that 60% of their current overnight photo customers will switch and use the one-hour service. What is the minimum amount of sales from the one-hour service to justi

one-hour machine will be $150,000 per year. XYZ currently offers overnight film processing with annual sales of $100,000. While many of the one-hour photo sales will be to new customers, XYZ estimates that 60% of their current overnight photo customers will switch and use the one-hour service. What is the minimum amount of sales from the one-hour service to justi

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 8EB: Shonda & Shonda is a company that does land surveys and engineering consulting. They have an...

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At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $67,000 per year, to ease the problem. Using the extra worker, the company will be able to produce and sell 9,000 more units per year. The selling price per unit is $20. The cost per unit currently is $15.85 as shown: What is the annual financial impact of hiring the extra worker for the bottleneck process?
Shonda & Shonda is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1.200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are as follows: A. What will be the impact on the break-even point if Shonda & Shonda purchases the new computer? B. What will be the impact on net operating income if Shonda & Shonda purchases the new computer? C. What would be your recommendation to Shonda & Shonda regarding this purchase?
Use the information for the question(s) below.Food For Less (FFL), 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 $150,000 per year. FFL currently offers overnight film processing with annual sales of $100,000. While many of the one hour photo sales will be to new customers, FFL estimates that 60% of their current overnight photo customers will switch and use the one hour service. Suppose that of the 60% of FFL's current overnight photo customers, half would start taking their film to a competitor that offers one hour photo processing if FFL fails to offer the one hour service. The level of incremental sales in this case is closest to: A. $150,000 B. $120,000 C. $60,000 D. $90,000
Use the information for the question(s) below.Food For Less (FFL), 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 $150,000 per year. FFL currently offers overnight film processing with annual sales of $100,000. While many of the one hour photo sales will be to new customers, FFL estimates that 60% of their current overnight photo customers will switch and use the one hour service. The level of incremental sales associated with introducing the new one hour photo service is closest to: A. $60,000 B. $90,000 C. $150,000 D. $120,000
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
A firm currently produces and sells 2,500 units every 60 days. One unit costs $150 to produce and sells for $500. The firm currently offers all its customers a "net 30" credit period and all customers pay on Day 60. In order to boost sales, the firm is considering Project D, which will simply add a window and offering a 10% discount for customers who pay immediately. Research suggests sales will increase sales to 2,600 units and approximately one-quarter of all customers will pay on Day 0 and 75% will pay on Day 30. If the annualized cost of capital is 6%, what is the NPV of Project D? The firm will continue to run to perpetuity. (Assume production and sales occur on Day 0 and repeat every 30 days).
You are thinking of opening a small copy shop. It costs $5500 to rent a copier for a year, and it costs $0.03 per copy to operate the copier. Other fixed costs of running the store will amount to $450 per month. You plan to charge an average of $0.10 per copy, and the store will be open 365 days per year. Each copier can make up to 100,000 copies per year. a) For a charge per copy between $0.07 to $0.11 and daily demands of 500, 1000, 1500, and 2000 copies per day, find annual profit. That is, find annual profit for eachof these combinations of charge per copy and daily demand. b) If you charge 0.09 per copy, what daily demand for copies will allow you to break even? c) Graph profit as a function for a charge per copy (between $0.07 to $0.11) for a daily demand of 500 copies; for a daily demand of 2000 copies. Interpret your graphs and label your graphs properly
An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1,200 batteries. The supplier pays $28 for each battery and estimates that the annual holding cost is 30 percent of the battery’s value. It costs approximately $20 to place an order (managerial and clerical costs). The supplier currently orders 100 batteries per month. What is the economic order quantity? Based on your answer above, how many orders will be placed per year using the EOQ? Determine the ordering, handling, and total inventory costs for the EOQ. Determine the effective annualized cost of financing for the following credit terms, assuming that (1) discounts are not taken, (2) accounts are paid at the end of the credit period, and (3) use 365=day year: a. 1/10, n/30; b. 3/10, n/30; c. 3/10, n/60; d. 2/10, n/90
You are thinking of opening a small copy shop. It costs $3500 to rent a copier for a year, and it costs $0.03 per copy to operate the copier. Other fixed costs of running the store will amount to $350 per month. You plan to charge an average of $0.10 per copy, and the store will be open 365 days per year. Each copier can make up to 100,000* copies per year. a) For a charge per copy between $0.07 to $0.11 and daily demands of 500, 1000, 1500, and 2000 copies per day, find annual profit. That is, find annual profit for each of these combinations of charge per copy and daily demand. use a two way table
A supermarket is planning on piloting a self-checkout system in one of its stores. It estimates that this requires an investment of about $50,000 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.
Phillip F lamm's Computer Store in Texas sells a printer for $200. Demand is constant during the year, and annual demand is forecasted to be 600 units. Holding cost is $20 per unit per year, whereas the cost of ordering is $60 per order.Currently, the company is ordering 12 times per year (50 units each time). There are 250 working days per yea r, and the lead time is 10 days.a) Given the current policy of ordering 50 units at a time, what is the total of the annual ordering cost and the annual holding cost?b) If the company used the absolute best inventory policy, what would be the total of ordering and holding costs?c) What is the reorder point?
Crane, Inc., sells two types of water pitchers, plastic and glass. Plastic pitchers cost the company $30 and are sold for $40. Glass pitchers cost $26 and are sold for $47. All other costs are fixed at $280,800 per year. Current sales plans call for 14,000 plastic pitchers and 28,000 glass pitchers to be sold in the coming year. Crane, Inc., has just received a sales catalog from a new supplier that is offering plastic pitchers for $28. What would be the new contribution margin per unit if managers switched to the new supplier? What would be the new breakeven point if managers switched to the new supplier? (Use contribution margin per unit to calculate breakeven units. Round answers to 0 decimal places, e.g. 25,000.)