Please answer only correct of all subparts.I asked this question already but someone give me incorrect answer.Please help me i will really upvote Tippy Toe Spa Company offers various services, such as facials, laser hair removal and microdermabrasion. Currently, the company isconsidering purchasing the following spa equipment:Laser Hair Removal Machines Microdermabrasion Machines Facial Oxygen UnitsCost per Machine$67,500$28,700$23,500Annual Cash Inflow$125,000$211,700$40,900Annual Cash Outflow$90,500$195,800$25,400Required Rate of Return10%11%5%Useful Life3 years4 years2 yearsResidual Value$820$840$0Assume that each equipment's annual cash flow will occur for the period equal to its useful life.Do not enter dollar signs or commas in the input boxes.Use the present values tables in the textbook appendix.Use the negative sign for negative values.Round your answers to the nearest whole number.a) Determine the NPV of each piece of equipment.Laser Hair Removal Machine: $Microdermabrasion Machine: $Facial Oxygen Unit: $b) For each piece of equipment, determine the maximum acceptable price using the NPV method.Laser Hair Removal Machine: $Microdermabrasion Machine: $

NPV = Present Value of Annual Cash Flows + Present Value of Residual Value - Initial Cost Present…

considering purchasing the following spa equipment: Laser Hair Removal Machines Microdermabrasion Machines Facial Oxygen Units $67,500 $28,700 $211,700 Cost per Machine $23,500 Annual Cash Inflow $125,000 $40,900 Annual Cash Outflow $90,500 $195,800 $25,400 Required Rate of Return 10% 11% 5% Useful Life 2 years 3 years $820 4 years $840 Residual Value $0 Assume that each equipment's annual cash flow will occur for the period equal to its useful life. Do not enter dollar signs or commas in the input boxes. Use the present values tables in the textbook appendix. Use the negative sign for negative values. Round your answers to the nearest whole number. a) Determine the NPV of each piece of equipment. Laser Hair Removal Machine: $ Microdermabrasion Machine: $ Facial Oxygen Unit: $ b) For each piece of equipment, determine the maximum acceptable price using the NPV method. Laser Hair Removal Machine: $ Microdermabrasion Machine: $

considering purchasing the following spa equipment: Laser Hair Removal Machines Microdermabrasion Machines Facial Oxygen Units $67,500 $28,700 $211,700 Cost per Machine $23,500 Annual Cash Inflow $125,000 $40,900 Annual Cash Outflow $90,500 $195,800 $25,400 Required Rate of Return 10% 11% 5% Useful Life 2 years 3 years $820 4 years $840 Residual Value $0 Assume that each equipment's annual cash flow will occur for the period equal to its useful life. Do not enter dollar signs or commas in the input boxes. Use the present values tables in the textbook appendix. Use the negative sign for negative values. Round your answers to the nearest whole number. a) Determine the NPV of each piece of equipment. Laser Hair Removal Machine: $ Microdermabrasion Machine: $ Facial Oxygen Unit: $ b) For each piece of equipment, determine the maximum acceptable price using the NPV method. Laser Hair Removal Machine: $ Microdermabrasion Machine: $

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter5: Product And Service Costing: Job-order System

Section: Chapter Questions

Problem 28P

See similar textbooks

Similar questions

The Excel worksheet form that appears below is to be used to recreate the Review Problem pertaining to the Magnetic Imaging Division of Medical Diagnostics, Inc. Download the workbook containing this form from Connect, where you will also receive instructions about how to use this worksheet form. You should proceed to the requirements below only after completing your worksheet. Required: 1. Check your worksheet by changing the average operating assets in cell B6 to $8,000,000. The ROI should now be 38% arid the residual income should now be $1,000,000. If you do not get these answers, find the errors in your worksheet and correct them. Explain why the ROI and the residual income both increase when the average operating assets decrease. 2. Revise the data in your worksheet as follows: a. What is the ROI? b. What is the residual income? c. Explain the relationship between the ROI and the residual income?
Jasmine Gonazles, Administrative Director of Small Imaging Center, has been asked by the practice members to see if it is feasible to add more staff to support the practice's mammography service, which currently has (2) analogue film or screen units and (2) technologists. She has compiled the following information to help make the decision: Reimbursement per mammography $75 Equipment costs per month $1600 Technologist cost per mammography $20 Technologist aide cost per mammography $4 Variable cost per mammography $10 Monthly maintenance per machine $700 What is the monthly patient volume needed per month to cover fixed and variable costs? What is the monthly patient volume needed per month if Small Imaging Center desires to cover its fixed and variable costs and make a $5,000 profit on this equipment to cover other costs associated with the organization? If reimbursement decreases to $55 per screen, what is the monthly patient…
Jasmine Gonazles, Administrative Director of Small Imaging Center, has been asked by the practice members to see if it is feasible to add more staff to support the practice's mammography service, which currently has (2) analogue film or screen units and (2) technologists. She has compiled the following information to help make the decision: Reimbursement per mammography $75 Equipment costs per month $1600 Technologist cost per mammography $20 Technologist aide cost per mammography $4 Variable cost per mammography $10 Monthly maintenance per machine $700 If a new technologist aide is hired in addition to the two technologists, what is the monthly patient volume needed at the original reimbursement rate to cover variable costs, but not profit?
Keep Smiling Dental Surgery is located in Christchurch. The company employs three dentists, four dental assistants and two receptionists who book appointments and keep records. The surgery provides a range of services including general dental care, paediatric dental care and teeth whitening. The clinic includes a small retail section that carries specialised products for home treatment. The surgery has recently updated its communications plan and negotiated a plan with a new provider which includes a monthly line charge and a usage charge for internet activity. The cost structure for communications is best described as: a.a fixed cost b.an opportunity cost c.a sunk cost d.a mixed cost e.a marginal cost
St. Johns Medical Center (SJMC) has five medical technicians who are responsible for conducting cardiac catheterization testing in SJMCs Cath Lab. Each technician is paid a salary of 36,000 and is capable of conducting 1,000 procedures per year. The cardiac catheterization equipment is one year old and was purchased for 250,000. It is expected to last five years. The equipments capacity is 25,000 procedures over its life. Depreciation is computed on a straight-line basis, with no salvage value expected. The reading of the catheterization results is conducted by an outside physician whose fee is 120 per test. The technicians report with the outside physicians note of results is sent to the referring physician. In addition to the salaries and equipment, SJMC spends 50,000 for supplies and other costs needed to operate the equipment (assuming 5,000 procedures are conducted). When SJMC purchased the equipment, it fully expected to perform 5,000 procedures per year. In fact, during its first year of operation, 5,000 procedures were run. However, a larger hospital has established a clinic in the city and will siphon off some of SJMCs business. During the coming years, SJMC expects to run only 4,200 cath procedures yearly. SJMC has been charging 850 for the procedureenough to cover the direct costs of the procedure plus an assignment of general overhead (e.g., depreciation on the hospital building, lighting and heating, and janitorial services). At the beginning of the second year, an HMO from a neighboring community approached SJMC and offered to send its clients to SJMC for cardiac catheterization provided that the charge per procedure would be 550. The HMO estimates that it can provide about 500 patients per year. The HMO has indicated that the arrangement is temporaryfor one year only. The HMO expects to have its own testing capabilities within one year. Required: 1. Classify the resources associated with the cardiac catheterization activity into one of the following: (1) committed resources, or (2) flexible resources. 2. Calculate the activity rate for the cardiac catheterization activity. Break the activity rate into fixed and variable components. Now, classify each activity resource as relevant or irrelevant with respect to the following alternatives: (1) accept the HMO offer, or (2) reject the HMO offer. Explain your reasoning. 3. Assume that SJMC will accept the HMO offer if it reduces the hospitals operating costs. Should the HMO offer be accepted? 4. Jerold Bosserman, SJMCs hospital controller, argued against accepting the HMOs offer. Instead, he argued that the hospital should be increasing the charge per procedure rather than accepting business that doesnt even cover full costs. He also was concerned about local physician reaction if word got out that the HMO was receiving procedures for 550. Discuss the merits of Jerolds position. Include in your discussion an assessment of the price increase that would be needed if the objective is to maintain total revenues from cardiac catheterizations experienced in the first year of operation. 5. Chandra Denton, SJMCs administrator, has been informed that one of the Cath Lab technicians is leaving for an opportunity at a larger hospital. She met with the other technicians, and they agreed to increase their hours to pick up the slack so that SJMC wont need to hire another technician. By working a couple hours extra every week, each remaining technician can perform 1,050 procedures per year. They agreed to do this for an increase in salary of 2,000 per year. How does this outcome affect the analysis of the HMO offer? 6. Assuming that SJMC wants to bring in the same revenues earned in the cardiac catheterization activitys first year less the reduction in resource spending attributable to using only four technicians, how much must SJMC charge for a procedure?
Make or Buy Filtration, Inc. manufactures filters for use in secondary water irrigation systems. The costs per unit, for 20,000 filters, are as follows. Direct materials $6.00 Direct labor 7.00 Variable overhead 1.00 Fixed overhead 2.00 Total costs $16.00 Irrigation Products has offered to sell 20,000 filters to Filtration for $16 per filter. If Filtration accepts Irrigation Products’ offer, the facilities used to manufacture filters could be used to produce refrigerator filtration units. Revenues from the sale of refrigerator filtration units are estimated at $54,000, with variable costs amounting to 50% of sales. In addition, $1 per unit of the fixed overhead associated with the manufacture of secondary water irrigation filters could be eliminated. Compute the following: Cost to make filters Answer Cost to buy filters Answer Should Filtration, Inc. accept Irrigation Product’s offer? Yes, the cost to purchase the filters is less than the cost to…
Alpena Corporation manufactures smartphone and tablet cases. The following is the cost of each unit. $ 7.80 3.40 1.40 10.80 $23.40 Materials Labor Variable overhead Fixed overhead ($1,620,000 per year; 150,000 units per year) Total Decatur Devices has approached Alpena with an offer to buy 3,000 cases at a price of $18.70 each for its new specialty tablet designed for health care workers. The regular price of an Alpena case is $31.00. Alpena has the total capacity to produce 180,000 units without increasing its fixed overhead. Decatur Devices requires that each case use its branding, which requires a more expensive embossing step. This will result in an additional $3.30 per case labor cost. The material cost of of the Decatur case will be the same as for the current models. The Decatur order will also require a one-time rental of embossing equipment for $4,704. Required: a. Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year. b.…
Filtration, Inc. manufactures filters for use in secondary water irrigation systems. The costs per unit, for 20,000 filters, are as follows. Direct materials $8.00 Direct labor 9.00 Variable overhead 1.00 Fixed overhead 2.00 Total costs $20.00 Irrigation Products has offered to sell 20,000 filters to Filtration for $20 per filter. If Filtration accepts Irrigation Products’ offer, the facilities used to manufacture filters could be used to produce refrigerator filtration units. Revenues from the sale of refrigerator filtration units are estimated at $57,000, with variable costs amounting to 50% of sales. In addition, $1 per unit of the fixed overhead associated with the manufacture of secondary water irrigation filters could be eliminated. Compute the following: Cost to make filters Answer Cost to buy filters Answer Should Filtration, Inc. accept Irrigation Product’s offer? Yes, the cost to purchase the filters is less than the cost to make them.…
Your company makes products XYZ and PQR. The following quality cost-related information is available for each product. For product XYZ: Warranty repair costs Reliability engineering Rework at Greenspan's manufacturing plant Manufaeturing inspeetion Transportation costs to customer sites to fix problems Quality training for employees $120,000 355,000 70,000 40,000 25,000 75,000 For product PQR: Prevention costs 79.4% Appraisal costs Internal failurc costs 3.7% 9.6% External failure costs 7.3% Total quality costs 100.0% 1. Calculate the total amounts of prevention cost, appraisal cost, internal failure cost, and external failure cost for product XYZ. 2. Based on what you found in (1) above, find the percentage of each category of quality cost to the total quality costs for product XYZ 3. Is the company spending its quality costs similarly for XYZ and PQR? Explain your answer.
Surgimed Ghana Ltd. sells technology needed to perform highly complex operations. When a hospital purchases equipment from Surgimed Ghana Ltd., it provides a very specialised piece of instrumentation, which is an integral part of the surgical process, free of charge. The legal ownership of the instruments remains with Surgimed Ghana Ltd. The instruments are returned to Surgimed Ghana Ltd. if they become faulty or at the end of their useful life, which is normally 1·5 years. At this point, Surgimed Ghana Ltd. replaces them with new instruments but retains the right to be reimbursed if the instruments are not returned. The instruments are nearly always returned at the end of their useful life and disposed of as clinical waste. Required: The directors of Surgimed Ghana Ltd. would like advice on the accounting treatment for the instruments sold to the hospital?
Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Three Rivers are identified as follows: Activities Activity Cost Billing error correction $60,000 Cable signal testing 140,000 Reinstalling service (installed incorrectly the first time) 40,000 Repairing satellite equipment 50,000 Repairing underground cable connections to the customer 25,000 Replacing old technology cable with higher quality cable 175,000 Replacing old technology signal switches with higher quality switches 150,000 Responding to customer home repair requests 30,000 Training employees 80,000 Total 750,000 Prepare a Pareto chart of these activities.
Caribu Company produces sanitation products after processing specialized chemical The following relates to its activities: • 1 Kilogram of chemicals purchased for $2000 and with an additional $1000 is processed into 400 grams of Crystals and 80 litres of a Cleaning agent. At split-off, a gram of Crystal can be sold for $1 and the Cleaning agent can be sold for $4 per litre. At an additional cost of $400, Caribu can process the 400 grams of Crystal into 500 grams of Detergent that can be sold for $2 per gram. The 80 litres of Cleaning agent is packaged at an additional cost of $300 and made into 200 packs of Softener that can be sold for $2 per pack. Required: 1. Allocate the joint cost to the Detergent and the Softener using the following a Sales value at split-off method ( b. NRV method 2. Should Caribu have processed each of the products further? What effect does the allocation method have on this decision?