Answer: He should decline production of the machine.
Explanation:
Analyzing the problem, we can determine if he should proceed or not by calculating the Net present value. That is present value of the machine in terms of perpetuity as it will be used forever and the cost incurred in its production.
Given the following ;
To manufacture $200 = 1 year, meaning
Amount or yearly payment = $200
Cost of machine = $2,000
Interest rate(r) = 11.5% = 0.115
Recall;
Present the value if perpetuity ;
(Payment per period ÷ rate)
= $200 ÷ 0.115 = $1739.13
Net present value = $1,739.13 - $2000 = - 260.87
Given the negative value of NPV, the cost outweighs the benefit, hence, he should decline.
Answer:
The correct answer is the option D: Total project costs are the lowest.
Explanation:
To begin with, when it comes to the business field and the management area, the "project duration" refers basically to the characteristic that the project management has regarding the duration of it, very commonly expressed in terms of working units like hours, days, weeks, months or years for example. Moreover, there are three major types of project duration that are: "Estimated Project Duration", "Actual Project Duration" and "Remaining Project Duration". And to end up, the point where the duration of the project is opmital is when the total project costs are the lowest of all.
Answer:
Total direct labor cost= $122,752
Explanation:
Giving the following information:
Each unit of output requires 0.77 direct labor-hours.
The direct labor rate is $11.20 per direct labor-hour.
Production budget:
October= 7,100 units
November= 6,900 units
Minimum hours= 5,480 hours
First, we need to determine the number of hours required for each month.
October= 7,100*0.77= 5,467 hours
November= 6,900*0.77= 5,313 hours
Direct labor budget:
October= 5,480*11.2= 61,376
November= 61,736
Total cost= $122,752
Answer:
The president of Riggs has missed something.
She should make the Sail instead of buying because its cheaper to manufacture than purchasing it outside.
Explanation:
<u>Cost of Manufacturing the Sails:</u>
Direct materials $93
Direct Labor $83
Total $173
The president of Riggs has included the $90 overhead based on $78,000 of annual fixed overhead that is allocated using normal capacity in the cost of manufacturing the sail which is incorrect.
Riggs Company is operating at 80 % of full capacity, hence utelizing the 20% excess capacity would not expand its fixed costs.
Thus said the current fixed cost are irrelevent for this decison and would be incurred whether or not Riggs Company utilizes the excess capacity
<u>Conclusion:</u>
The cost of making the sail is $173 which is lower than the cost of buying them at $ 258.
I would advise The president of Riggs to make the sail by utilizing the excess capacity since its cheaper than purchasing it outside.
A because then she can gain interest on her money
