Rolls-Royce, the luxury automobile manufacturer, is considering a production process for its Ghost model. The current process incurs variable costs of £80,000 per unit and fixed costs of £15 million per year. The proposed new process would reduce variable costs to £70,000 per unit but increase fixed costs to £18 million per year. Rolls-Royce expects to produce and sell 500 Ghost models next year. What is the difference in total costs between the current and proposed processes? At what production volume would the total costs of the two processes be equal (i.e., the break-even point between the two processes)? Which process should Rolls-Royce choose if they expect sales to grow in the coming years? On December 31, 2023, Marriott International, the global hospitality company, reported accounts receivable of $1.8 billion and an allowance for doubtful accounts of $120 million on its balance sheet. During 2024, Marriott recorded credit sales of $15 billion and collected $14.7 billion from customers. The company wrote off $90 million of uncollectible accounts during the year. At the end of 2024, Marriott estimated that 3% of its outstanding accounts receivable would be uncollectible. What is the amount of bad debt expense Marriott should recognize for 2024? What will be the balance of the allowance for doubtful accounts at the end of 2024? What will be the net accounts receivable reported on Marriott's balance sheet as of December 31, 2024?

XYZ Corporation is considering a new product line. They believe the new product can be sold for $10 per unit and will have the following demand over the next 3 years: 10,000 units in year 1, 15,000 in year 2 and 17,000 in year three. The incremental costs of these products will consume 50% of the sale price. The new line will require a machine be purchased today for $60,000 and depreciated using the straight line method over the life of the machine with a salvage value of zero. The project will utilize $30,000 in net working capital and the company’s tax rate is 30%. Which of the following are true regarding the project’s relevant cash flows for year 0, 1, 2, 3. I, II & III are correct     b. I. The company’s year zero cash flow is (-$60000)     c. II.  The company’s cash flow in year 1 is $41,000 d. II & III are correct e. III.  The company’s cash flow in year 3 is 65,500

Asgone plc is considering an investment to increase its manufacturing capacity from 10,000 units per annum to 15,000 units. The current output is sold at a price of $12.50 per unit but market research suggests the higher level of output could be sold at a price of $10 per unit. As the existing plant is due to be replaced this year it is a good time to consider the possibility of expansion. The variable cost per unit of the larger plant is $3.50 whereas it is $5.00 for the smaller plant. The larger plant will cost $60,000 and the smaller plant $25,000. Both plants would be depreciated on a straight-line basis for tax purposes over a five-year life, and this also constitutes the expected working life of the plant. All other costs would remain unchanged. The relevant tax rate is 20%. Is the investment in the larger plant worthwhile if the required rate of return is 10%? Please indicate Incremental cash flow. And show full chart.

Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.10. The machine will increase fixed costs by $12,000 per year. The information they will use to consider these changes is shown here. A. What will the impact be on the break-even point if Flanders purchases the new machinery? Round per unit cost answers to two decimal places. Current New Machine Units Sold 221,000 Sales Price Per Unit $2.10 Variable Cost Per Unit $1.70 Contribution Margin Per Unit $0.40 %24 Fixed Costs $60,000 Break-Even (in units) 150,000 Break-Even (in dollars) $315,000 B. What will the impact be on net operating income if Flanders purchases the new machinery? Current New Machine Sales $464,100 Variable Costs 375,700 Contribution Margin $88,400 Fixed Costs 60,000 Net Income (Loss) $28,400 C. What would your recommendation be to Flanders regarding this purchase? a. The new equipment will increase fixed costs substantially but net income will still…

A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs $0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.34 per unit. If annual demand is expected to be 9 million units, which plant offers the lowest total cost? Plant B, because it has the lower variable cost per unit. Plant A, because it is cheaper than Plant B for all volumes below 10,000,000 units. Plant A, because it is cheaper than Plant B for all volumes. Plant B, because it is cheaper than Plant A for all volumes below 10,000,000 units. Neither Plant A nor Plant B, because the crossover point is at 9 million units.

Two different manufacturing processes are being consideredfor making a new product. The first process is less capitalintensive, with fixed costs of only $50,000 per year andvariable costs of $700 per unit. The second process has fixedcosts of $400,000 but has variable costs of only $200 per unit.a. What is the break-even quantity beyond which the secondprocess becomes more attractive than the first?b. If the expected annual sales for the product is 800 units,which process would you choose?

Assume that if Sunland Water accepts Clifton’s offer, the company can use the freed-up manufacturing facilities to manufacture a new line of growing lights. The company estimates it can sell 86,490 of the new lights each year at a price of $11. Variable costs of the lights are expected to be $8 per unit. The timer unit supervisory and clerical staff would be transferred to this new product line. Calculate the total relevant cost to make the timer units and the net cost if they accept Clifton's offer.

What is the OCF?

Calculate the total incremental cost of making 78,000 and buying 78,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier?

Turik Electronics manufactures microprocessorbased soft starters that use thyristors for controlled reduced voltage during starting and stopping. The company is planning a production-line expansion that will cost $1.3 million. If the company uses a minimum attractive rate of return of 15% per year, what is the equivalent annual cost in years 1 through 5 of the investment?