Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 16E
To determine
The amount of avoidable cost associated with the segment
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Exercise 6-11A (Static) Establishing price for an outsourcing decision LO 6-3
Levesque Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the
engines from a reliable manufacturer. The annual costs of making the engines are shown here.
Cost of materials (20,000 units × $26)
Labor (20,000 units × $20)
Depreciation on manufacturing equipment*
Salary of supervisor of engine production
Rental cost of equipment used to make engines
Allocated portion of corporate-level facility-sustaining costs
Total cost to make 20,000 engines
*The equipment has a book value of $90,000 but its market value is zero.
Required
a. Determine the maximum price per unit that Levesque would be willing to pay for the engines.
b. Determine the maximum price per unit that Levesque would be willing to pay for the engines, if production increased to 24,000
units.
Note: For all requirements, round intermediate and final answers to 2 decimal places.
a. Maximum…
Problem 3 A metal plating company on government contract is considering four different
methods for recovering by-product heavy metals from a processing site's liquid waste. The
investment costs and annual net incomes associated with each method have been estimated.
All methods have an 8-year life; the MARR is 11% per year; and an AW-based ROR analysis
is required by the government agency prior to final selection. Select the economically best one.
Use the RATE() function in Excel to solve this problem.
Annual Income,
Salvage
Method
First Cost, $
Value, $
$/Year
A
30,000
1,000
4,000
B
36,000
2,000
5,000
C
41,000
500
8,000
Ꭰ
53,000
-2,000
10,500
Exercise 8-1 (Algo) Cost of plant assets LO C1
Rizio Company purchases a machine for $14,000, terms 2/10, n/60, FOB shipping point. Rizio paid within the discount period and took
the $280 discount. Transportation costs of $316 were paid by Rizio. The machine required mounting and power connections costing
$968. Another $456 is paid to assemble the machine, and $40 of materials are used to get it into operation. During installation, the
machine was damaged and $350 worth of repairs were made.
Complete the below table to calculate the cost recorded for this machine.
Amount Included in Cost of Equipment:
Invoice price of machine
Net purchase price
Total cost to be recorded
$
0
0
Chapter 13 Solutions
Survey Of Accounting
Ch. 13 - Prob. 1QCh. 13 - Prob. 2QCh. 13 - Prob. 3QCh. 13 - Prob. 4QCh. 13 - Prob. 5QCh. 13 - Prob. 6QCh. 13 - Prob. 7QCh. 13 - Prob. 8QCh. 13 - Prob. 9QCh. 13 - Prob. 10Q
Ch. 13 - Prob. 11QCh. 13 - Prob. 12QCh. 13 - Prob. 13QCh. 13 - Prob. 14QCh. 13 - Prob. 15QCh. 13 - Prob. 16QCh. 13 - Prob. 17QCh. 13 - Prob. 18QCh. 13 - Prob. 19QCh. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Exercise 6-5AOpportunity costs Norman Dowd owns...Ch. 13 - Prob. 6ECh. 13 - Prob. 7ECh. 13 - Prob. 8ECh. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Exercise 6-11AEstablishing price for an...Ch. 13 - Exercise 6-12AOutsourcing decision with...Ch. 13 - Exercise 6-13AOutsourcing decision affected by...Ch. 13 - Prob. 14ECh. 13 - Exercise 6-15ASegment elimination decision Dudley...Ch. 13 - Prob. 16ECh. 13 - Exercise 6-17AAsset replacementopportunity cost...Ch. 13 - Prob. 18ECh. 13 - Exercise 6-19A Asset replacement decision Mead...Ch. 13 - Exercise 6-20A Asset replacement decision Kahn...Ch. 13 - Exercise 6-21A Annual versus cumulative data for...Ch. 13 - Problem 6-23A Context-sensitive relevance Required...Ch. 13 - Problem 6-24A Context-sensitive relevance...Ch. 13 - Problem 6-25A Effect of order quantity on special...Ch. 13 - Problem 6-26A Effects of the level of production...Ch. 13 - Problem 6-28A Eliminating a segment Western Boot...Ch. 13 - Effect of activity level and opportunity cost on...Ch. 13 - Problem 6-30A Comprehensive problem including...Ch. 13 - Prob. 29PCh. 13 - ATC 6-1 Business Application Case Analyzing...Ch. 13 - ATC 6-2 Group Assignment Relevance and cost...Ch. 13 - Prob. 3ATCCh. 13 - Prob. 4ATCCh. 13 - Prob. 5ATC
Knowledge Booster
Similar questions
- Problem 5: Platypus Corporation's managers have presented the company's management with two proposals for expanding its production capacity. Based on the following two different alternatives, which proposal should they adopt? Cost of the Equipment Required Project 1 $250,000 Working Capital Investment Required 0 Annual Cash Inflows $65,000 Maintenance cost in year 4 $15,000 Maintenance cost in year 6 0 Salvage Value of Equipment in 8 Years $12,000 Project 2 $100,000 $150,000 $50,000 0 $15,000 0 Both projects have a life of 8 years. In 8 years Project 2's working capital will be released and be available to invest in other projects. The company has a discount rate of 16% Required: 1) Calculate the net present value for each project. 2) Based solely on the net present value of the project, which alternative would you recommend the company invest in? Why?arrow_forwardShort answer question 1 Research Corp., a publicly accountable entity, incurred the following costs in its research and development division: Jan 1 - July 31, Aug 1- Dec. 31, 2021 2021 Materials 10,000 12,000 Labour costs 15,000 32,000 Directly attributable overhead 8,000 15,000 At July 31, 2021, Research Corp. determined that the project was technically feasible and commercially viable. Research Corp. had sufficient resources and intentions to complete the project and was confident that there was demand in the marketplace for the product. Measurement of amounts allocated above are reliable. Required: How much, if any, of the costs can be capitalized for fiscal 2021?arrow_forwardföllowing Cost Factor Site B 170,000$ Site A Price of land 100,000S Monthly cost of delivering materials S 10,000 $ 7,000 Cost of equipment setup $ 12,000 $ 9,000 Cost of utilities per month $ 1,500 1,100 For site A, an extra $ 60/ day is needed for additional site guards. a- Which site should the contractor select? b- When do the costs of two sites are equals (After how many months of work the costs are similar)?arrow_forward
- Exercise 6-17A (Algo) Asset replacement-opportunity cost LO 6-5 Thornton Freight Company owns a truck that cost $36,000. Currently, the truck's book value is $27,000, and its expected remaining useful life is five years. Thornton has the opportunity to purchase for $26,000 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $5,000 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $18,000. Required Calculate the total relevant costs. Should Thornton replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out? Answer is not complete. Keep Old Total relevant costs Should Thornton replace or continue the old truck? Return to question Replace With New Replace the old truck.arrow_forwardExercise 13-17A (Algo) Asset replacement decisions-opportunity cost LO 13-5 Jordan Freight Company owns a truck that cost $42.000 Currently, the truck's book value is $22,000, and its expected remaining useful life is five years. Jordan has the opportunity to purchase for $30100 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $5,600 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $10,000 Required Calculate the total relevant costs. Should Jordan replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out? Total relevant costs Should Jordan replace or continue the old truck? Keep Old Replace the old truck Replace With Newarrow_forwardQ16 Red Company allocates research and development costs to its three research facilities based on each facility's total annual revenue from new product developments: Facility location Kentucky Arizona Illinois Total New product revenue $ 66,000,000 $ 80,000,000 $ 104,000,000 $ 250,000,000 Research & Development $ 40,000,000 Using revenue as an allocation base, the amount of costs allocated to the Arizona research facility is calculated to be: Multiple Choice $15,872,000. $22,528,000. $37,500,000. $12,800,000. $9,728,000.arrow_forward
- Problem 2: Alternatives for constructing a new facility which are mutually exclusive are being considered. The annual equivalènt costs and estimated benefits of the alternatives are as follows: Alternative Cost Benefits $1,050,000 $900,000 $1,230,000 $1,350,000 $990,000 $1,110,000 $810,000 $1,390,000 $1,500,000 $1,140,000 A C D E Using the B-C ratio, which alternative, if any, should be adopted for investment?arrow_forwardExercise 14-45 (Algo) Compare Historical Cost, Net Book Value to Gross Book Value (LO 14-2, 5) The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $37.0 million and having a four-year expected life, after which the assets can be salvaged for $7.4 million. In addition, the division has $37.0 million in assets that are not depreciable. After four years, the division will have $37.0 million available from these non depreciable assets. This means that the division has invested $74 million in assets with a salvage value of $44.4 million. Annual operating cash flows are $12.2 million. In computing ROI, this division uses end-of-year asset values in the denominator. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Required: a. & b. Compute ROI, using net book value and gross book value for each year. Note: Enter your answers as a percentage rounded to 2 decimal places (i.e., 32.10).…arrow_forwardExercise 10-1 (Algo) Cost of plant assets LO C1 Rizio Company purchases a machine for $13,400, terms 1/10, n/60, FOB shipping point. Rizio paid within the discount period and took the $134 discount. Transportation costs of $303 were paid by Rizio. The machine required mounting and power connections costing $926. Another $437 is paid to assemble the machine, and $40 of materials are used to get it into operation. During installation, the machine was damaged and $320 worth of repairs were made. Complete the below table to calculate the cost recorded for this machine.arrow_forward
- 2 Saalfrank Corporation is considering two alternatives that are code-named M and N. Costs associated with the alternatives are listed below: Supplies costs Assembly costs. Power costs Inspection costs. Alternative M Alternative N $ 49,000 $ 30,000 $ 15,500 $ 12,000 a. Supplies costs a. Assembly costs a. Power costs a. Inspection costs b. Differential cost $ 55,000 $ 30,000 $ 10,000 $ 23,000 3 Required: a. Which costs are relevant and which are not relevant in the choice between these two alternatives? b. What is the differential cost between the two alternatives?arrow_forward8. Analysis of a replacement project Aa Aa At times firms will need to decide if they want to continue to use their current equipment or replace the equipment with newer equipment. The company will need to do replacement analysis to determine which option is the best financial decision for the company. Johnson Co. is considering replacing an existing piece of equipment. The project involves the following: The new equipment will have a cost of $1,800,000, and it will be depreciated on a straight-line basis over a period of six years (years 1-6). • The old machine is also being depreciated on a straight-line basis. It has a book value of $200,000 (at year 0) and four more years of depreciation left ($50,000 per year). The new equipment will have a salvage value of $0 at the end of the project's life (year 6). The old machine has a current salvage value (at year 0) of $300,000. Replacing the old machine will require an investment in net working capital (NWC) of $60,000 that will be…arrow_forwardCurrent Attempt in Progress Pharoah Manufacturing Inc. is installing a new plant at its production facility. It has incurred these costs: Cost of the manufacturing plant (cost per supplier's invoice plus non-recoverable taxes) Initial delivery and handling costs Cost of site preparation Consultants used for advice on the acquisition of the plant Interest charges paid to supplier of plant (indirect financing charges for amounts borrowed by supplier) Estimated dismantling costs to be incurred after seven years Operating losses before commercial production Determine which costs Pharoah Manufacturing can capitalize in accordance with IAS 16. According to IAS 16, following costs can be capitalized: eTextbook and Media Save for Later $2,450,000 205,000 603,000 108,000 201,000 309,000 401,000 Attempts: 0 of 3 used Submit Answerarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning