FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Grace Co. can further process Product B to produce Product C. Product B is currently selling for $24 per pound and costs $16 per pound to produce. Product C would sell for $39 per pound and would require an additional cost of $9 per pound to produce. What is the differential revenue of producing and selling Product C? a.$23 per pound b.$39 per pound c.$30 per pound d.$15 per poundarrow_forwardSuppose that division R can sell any quantity of Ranbax in a perfectly competitive market for $0.33 a pound. To maximize Letang’s income, how many pounds of Ranbax should division R transfer to divisions S and T, and how much should it sell in the external market?arrow_forwardCarmen Co. can further process Product J to produce Product D. Product J is currently selling for $20.15 per pound and costs $15.25 per pound to produce. Product D would sell for $36.60 per pound and would require an additional cost of $9.05 per pound to produce. The differential cost of producing Product D isarrow_forward
- Brecht Ltd produces a standard product which is sold for £85 each. The business incurred variable costs of £550,000 last year and total costs were £850,000. The business sold 11,000 units during the year and was operating at full capacity. The business intends to expand its output. This will involve building a factory extension, which will increase annual fixed costs by £120,000 per year. 1. Calculate the number of products that need to be sold in order for the business to break even, after the new factory extension has been built. 2. Calculate the profit (loss) that would be generated if the business sold 10,000 units (i) before the factory extension is built. (ii) after the factory extension is built.arrow_forwardThe pipes and plastic company manufactures wiring tools. The company is currently producing well below its full capacity. An Accra based company has approached pipes and plastics limited with an offer to buy 10,000 tools at ghc 1.75 each. Pipes and plastic limited sells its tools wholesale for ghc 1.85each; the average cost per unit is gh1.83 of which ghc 0.27 is fixed costs. If pipes and plastics were to accept the Accra based company's offer, what will be the increase in pipes and plastic operating profit?arrow_forwardA US multinational corporation has operations in Bolivia through which it plans to sell a new product of 500,000 cans of beans per year for the next 3 years, at a price of BOB 4 per can after incurring a variable cost of BOB 2.50 per can. The company will also incur a fixed cost of BOB 120,000 per year. The company has invested BOB 900,000 today in manufacturing equipment for its Bolivian operations, which will be depreciated at $300,000 annually over its 3-year life. The corporation's required rate of return (WACC) is 20% and has a tax rate of 25%. The spot rate was BOB 6.91/$ before it unexpectedly changed to BOB 7.25/$. What is the value of the Bolivian operations prior to the unexpected change in the spot rate assuming that the operations have a 3-year life only? (round to the nearest dollar) US$237,699 US$107,453 US$159,076 88 US$166,903arrow_forward
- Green Co. incurses cost of $15 per pound to produce Product X, which it sells for $26 per pound. The company can further process Product X to produce Product Y. Product Y would sell for $30 per pound and would require an additional cost of $10 per pound to be produced. The differential cost of producing Product Y is _____.arrow_forwardCox Electric makes electronic components and has estimated the following for a new design of one of its products. Fixed cost = $12,350 • Material cost per unit = $0.16 •Labor cost per unit = $0.12 •Revenue per unit = $0.66 Note that fixed cost is incurred regardless of the amount produced. Per-unit material and labor cost together make up the variable cost per unit. Assuming that Cox Electric sells all that it produces, profit is calculated by subtracting the fixed cost and total variable cost from total revenue. Construct an appropriate spreadsheet model to find the profit based on a given production level and use the spreadsheet model to answer these questions. (a) Construct a one-way data table with production volume as the column input and profit as the output. Breakeven occurs when profit goes from a negative to a positive value; that is, breakeven is when total revenue = the total cost, yielding a profit of zero. Vary production volume from 0 to 100,000 in increments of 10,000.…arrow_forwardHit or Miss Sports is introducing a new product this year. If its see-at-night soccer balls are a hit, the firm expects to be able to sell 42,800 units a year at a price of $70 each. If the new product is a bust, only 20,700 units can be sold at a price of $45. The variable cost of each ball is $26 and fixed costs are zero. The cost of the manufacturing equipment is $5.86 million, and the project life is estimated at 10 years. The firm will use straight-line depreciation over the 10-year life of the project. The firm's tax rate is 35% and the discount rate is 14%. a. If each outcome is equally likely, what is the expected NPV? ( Use the minus sign for negative value. Round your answer to the nearest dollar.) NPV $ Will the firm accept the project? The firm will (Click to select) v the project. b. Suppose now that the firm can abandon the project and sell off the manufacturing equipment for $5.2 million if demand for the balls turns out to be weak. The firm will make the decision to…arrow_forward
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