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Diano4ka-milaya [45]
3 years ago
12

GMC purchased a $180,000 milling machine, which will be used for 5 years. The machine is expected to save the company $30,000 du

ring the first year of operation. Then, the annual savings is expected to DECREASE by 3% per year over the previous year due to additional cost of maintenance. The machine is to be operated 5,000 hours per year (on average) and the machine is expected to have NO salvage value at the end of the 5-year project. Interest is 15% compounded annually. Determine the present worth, PW (15%), of all the savings in this problem. (Round your answer to the nearest dollar. Do not enter the $ symbol or use commas.)
Business
1 answer:
aliina [53]3 years ago
3 0

Answer:

Explanation:

\left[\begin{array}{ccc}Year&Cashflow&Present Value\\0&-180,000&-180,000\\1&30,000&26,086.9565\\2&29,100&22,003.7807\\3&28,227&18559.7107\\4&27,380.19&15,654.7125\\5&26,558.7843&13,204.4097\\Net&Value&-84,490.4299\\\end{array}\right]

The first step will be calculate the alue of eachcash saving

mulitply by (1- 0.03) which is the rate at which the flow decrease.

Then we calculate the present value of each cashflow

\frac{Principal}{(1 + rate)^{time} } = PV

<u />

<u>For example year 4:</u>

\frac{27,380.19}{(1 + 0.15)^{4} } = 15,654.7125

Then we add all the cash saving and compare with the machien cost to calcuale the net present value of the machine

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Winslow Inc. manufactures and sells three types of shoes. The income statements prepared under the absorption costing method for
pentagon [3]

Answer:

Winslow Inc.

a. I do not agree with management's decision and conclusions.  Before the elimination of the Running Shoes Department, the company recorded a total net profit of $7,900.  After the elimination, the company recorded a total net loss of $112,600.

b. Variable Costing Income Statement for the three products:

Winslow Inc. Product Income Statements—Variable Costing For the Year Ended December 31, 20Y1

1                                   Cross Training   Golf Shoes   Running

                                             Shoes                             Shoes

2. Revenues                      $850,000  $700,000   $635,000

3. Variable Costs:

Cost of goods sold             284,500     248,400     298,500

Selling & admin. expenses 293,100      175,500      216,000

Total variable costs            577,600     423,900      514,500

4. Contribution margin    $272,400    $276,100   $120,500

5. Fixed Costs:

Cost of goods sold            128,500        90,300     120,500

Selling and admin. exp.      95,900        82,400     143,500

Total fixed costs               224,400       172,700    264,000

6. Income (Loss) from

operations                       $48,000    $103,400  ($143,500)    $7,900

c. The impact of eliminating the running shoe line is the increase of the net operating loss from a net profit of $7,900 to $112, 600.

Explanation:

a) Data and Calculations:

Winslow Inc. Product Income Statements—Absorption Costing For the Year Ended December 31, 20Y1

1                                       Cross Training   Golf Shoes   Running

                                             Shoes                                  Shoes

2. Revenues                    $850,000.00 $700,000.00 $635,000.00

3. Cost of goods sold        413,000.00    338,700.00     419,000.00

4. Gross profit                 $437,000.00  $361,300.00   $216,000.00

5. Selling and

administrative expenses 389,000.00  257,900.00     359,500.00

6. Income (Loss) from

operations                       $48,000.00 $103,400.00  ($143,500.00)

1                                 Cross Training   Golf Shoes   Running

                                             Shoes                             Shoes

2. Revenues                    $850,000   $700,000   $635,000

3. Cost of goods sold

Variable cost                      284,500     248,400     298,500

Fixed cost                           128,500       90,300      120,500

Total cost of goods sold    413,000     338,700       419,000

4. Gross profit                 $437,000   $361,300     $216,000

5. Selling and

administrative expenses

Variable cost                      293,100     175,500       216,000

Fixed cost                            95,900      82,400       143,500

Total selling & admin.       389,000    257,900      359,500

6. Income (Loss) from

operations                       $48,000   $103,400    ($143,500)     $7,900

Elimination of the Running Shoes Department:

1                                 Cross Training   Golf Shoes   Total

                                             Shoes                        

2. Revenues                    $850,000   $700,000   $1,550,000

3. Cost of goods sold

Variable cost                      284,500     248,400       532,900

Fixed cost                           128,500       90,300        339,300

Total cost of goods sold    413,000     338,700        872,200

4. Gross profit                 $437,000   $361,300      $677,800

5. Selling and

administrative expenses

Variable cost                      293,100     175,500       468,600

Fixed cost                            95,900      82,400        321,800

Total selling & admin.       389,000    257,900       790,400

6. Income (Loss) from

operations                       $48,000   $103,400     ($112,600)

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