A piece of new equipment has been proposed by engineers to increase the productivity of a certain manual welding operation. The investment cost is $25,000, and the equipment will have a market value of $5,000 at the end of a study period of seven years. Increased productivity attributable to the equipment will amount to $8,000 per year after extra operating costs have been subtracted from the revenue generated by the additional production. 1-1 If the firm's MARR is 20% per year, is this proposal a sound one? Use the PW method.
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- Investors put up $1040000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 per cent on thier investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks. Included in the fixed costs in 10% return to the investors and $2000 in other fixed costs. Variable costs include $2000 in weekly wages, and $600 per week in materials, electricity, etc. The restaurant charges $8 on average per meal. The operating profit per week of the restaurant is A)$0 B)$2900 C)$4600 D)$4900The following are data from a production, calculate; The Break-even point in terms of sales value and in . The production demand is at 20,000 units. What is the cw1ent production profit? If the management decides to lower dow11its selling price by 50% given the same demand, will this be a sound decision? Justify. Monthly Fixed Factory Overhead Cost = P600,000 Monthly Fixed Selling Overhead Cost = Pl20,000 Va1iable Manufacturing Cost per Unit = P220 Va1iable Selling Cost per Unit = P30 Variable Distribution Cost per Units = P50 Selling Price per limit = P4001. To resolve the issue of Coronavirus testing, a city decided to set up a plant to producelow cost testing kits. This facility will operate for 12 months and then it will bedismantled. It will cost the city $P to buy the main machine. In addition, the city willspend $45,000 as planning cost before the work commences. The monthly operating andmaintenance cost to run the facility will be $52,500. The city also expects to loseadditional $43,000 every month for the duration of the facility. It is estimated that, thisplant will save taxpayers who will use the testing facility about $15 per usage. The cityexpects 0.5% of its 2 Million citizens to use the facility every month for 12 months. Thefacility will be upgraded at a cost of $40,000 at the end of month 5, $75,000 at the end ofmonth 10, and will then be dismantled at the end of month 12 for $100,000. Afterdismantling, the city will sell the used machine at it salvage value of $72,000. Usingbenefit-cost ratio analysis with an interest…
- ABC Telecom wants to launch a new product. it is observed that the fixed cost of the new product is $35,000 and the variable cost per unit is $500. The revenue function for the sale of D unit is 5000D - 100D. What is the maximum profit of the company? $Blank 1 Blank 1 Add your answerZodiac Furniture is considering the production of anew line of metal offi ce chairs. Th e chairs can be producedin-house using either process A or process B. Th e chairs canalso be purchased from an outside supplier. Specify the levelsof demand for each processing alternative given the costs in thetable. Fixed Cost Variable Cost Process A $20,000 $30Process B $30,000 $50Outside Supplier $0 $502-36. A gear manufacturer produces gears for a ma- chine. Two processes, casting and forging, are possible for manufacturing, and the parameters of each process are as follows Casting Forging Production rate 80 gears per hour 10 hours per day 40 gears per hour 16 hour per day Daily production time Percent of parts rejected based on visual inspection (20% 10% Assume that the daily demand for gears allows all defect-free gears to be sold. Additionally tested or rejected gears cannot be sold. Find the process that maximizes profit per day if each part is made from $5 worth of material and can be sold for $70) Both processes are fully automated, and variable overhead cost is charged at the rate of $90 per hour.
- 2. Allwhite Company sells its single product for P30 per unit. The contribution margin ratio is 45%, and fixed costs are P10,000 per month. Allred has an effective income tax rate of 40%. If Allred sells 1,000 units in the current month, Allwhite's variable expenses would be O Ph 9,900 Ph 12,000 O Ph 13,500 O Ph 16,50032. A factory has production capacity of P12,000 units per month with an efficiency of 80% Fixed monthly operating cost = P600,000 Material and labor cost = P200/unit Selling price = P500.00 Determine the monthly profitTo automate one of its production processes, theMilwaukee Corporation bought three flexible manufacturing cells at a price of $400,000 each. Whenthey were delivered, Milwaukee paid freight chargesof $20,000 and handling fees of $15,000. Site preparation for these cells cost $45,000. Six foremen, eachearning $20 an hour, worked five 40-hour weeks toset up and test the manufacturing cells. Special wiring and other materials applicable to the new manufacturing cells cost $3,500. Determine the cost basis(amount to be capitalized) for these cells.
- 12-A customer has asked your company to prepare a bid on supplying 1000 units of a new product. Production will be in batches of 100 units. You estimate that costs for the first batch of 100 units will average OMR 200 a unit. You also expect that a 90% learning curve will apply to the cumulative labour cost on this contract. Estimate the incremental labour cost of extending the production run to produce an additional 1000 units. a. None of the given options b. OMR 52490 c. OMR 55500 d. OMR 60000Ella Ltd recently started to manufacture and sell productDG. The variable cost of product DG is £4 per unit and the totalweekly fixed costs are £18 000.The company has set the initial selling price of product DG byadding a mark up of 40 per cent to its total unit cost. It has assumedthat production and sales will be 3000 units per week.The company holds no stocks of product DG.Required:(a) Calculate for product DG:(i) the initial selling price per unit; and(ii) the resultant weekly profit. The management accountant has established that alinear relationship between the unit selling price (P in £)and the weekly demand (Q in units) for product DG isgiven by:P = 20 - 0:002QThe marginal revenue (MR in £ per unit) is related to weeklydemand (Q in units) by the equation:MR = 20 - 0:004Q(b) Calculate the selling price per unit for product DG that shouldbe set in order to maximize weekly profit. (c) Distinguish briefly between penetration and skimming pricingpolicies when launching a new…3. The annual worth method An office supply company has purchased a light duty delivery truck for $15,000. It is anticipated that the purchase of the truck will increase the company’s revenue by $10,000 annually, whereas the associated operating expenses are expected to be $3,000 per year. The truck’s market value is expected to decrease by $2,500 each year it is in service. If the company plans to keep the truck for only 2 years, what is the annual worth of this investment? The MARR = 18% per year