Wood Carving Corporation manufactures three products. Because of a recent lack of skillled wood carvers, the corporation has had
a shortage of available labor hours. The following per unit data relates to the three products of the corporation:
Letter Openers Elvis Statues Candle Holders
Sales Price $30 $80 $42
Variable Costs $20 $40 $20
Labor Hours Required 1 6 2
Assume that Wood Carving has 1,800 labor hours available next month. Also assume that Wood Carving can only sell 800 units of each product in a given month. What is the maximum amount of contribution margin that Wood Carving can generate next month given this labor hour shortage?
A. $12,000
B. $19,000
C. $19,600 (Correct Answer)
D. $19,800
E. None of the Above
Letter Openers Elvis Statues Candle Holders
Sales Price $30 $80 $42
Variable Costs $20 $40 $20
Labor Hours Required 1 6 2
Assume that Wood Carving has 1,800 labor hours available next month. Also assume that Wood Carving can only sell 800 units of each product in a given month. What is the maximum amount of contribution margin that Wood Carving can generate next month given this labor hour shortage?
A. $12,000
B. $19,000
C. $19,600 (Correct Answer)
D. $19,800
E. None of the Above
1 answer:
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Answer:
net wortht -143,280.85
equivalent annual cost $ 24,932.98
Explanation:
We sovle for the present value of each annuity:
<em><u>The first three years:</u></em>
C 31,000.00
time 3
rate 0.08
PV $79,890.0066
<em><u>Then the second phase annuity:</u></em>
C 20,000.00
time 5
rate 0.08
PV $79,854.2007
NOw, we discount this as it is three years into the future
Maturity $79,854.2007
time 3.00
rate 0.08000
PV 63,390.8391
Total net worth:
79,890.0066 - 63,390.8391 = -143,280.85
The EAC will be the annuity which makes the Present work
PV 143,280.85
rate 0.08
time 8
C $ 24,932.983