Answer:
The answer is: a
Explanation:
The Parton Company has a 'make or buy' decision. This decision involves analysing the incremental costs associated with each option. Incremental costs are costs incurred as a result of producing one more unit of a product. If the excess capacity can be utilised to produce the headlights at a lower cost than the cost of acquiring the headlights from an external supplier, then the company should produce the headlights.
The Parton Company incurs $12.80 per headlight purchased from the external supplier. Added to this cost, are the existing costs of operating below plant capacity. If making the headlights in the manufacturing plant yields a positive contribution to fixed costs, then the Parton company should produce the headlights in the manufacturing plant.
By producing the headlights, the Parton company gains a contribution to fixed costs of $1.03 per headlight.
Foregone purchase costs from supplier: $12.80
Incurred costs (directly) from production: ($11.77)
Direct materials ($4.45)
Direct Labour ($3.45)
Manufacturing Overheads: $(6.45*0.6) <u>($3.87)</u>
Net gain per headlight <u> </u><u>$1.03</u>
Answer:
That would be a shortage.
Answer:
Fran should choose that which compounds quarterly
Explanation:
In Compound Interest investment, the interest at the end of the compounding period is added to form a new base capital.
If this is done every 3 months, the principal at the beginning of each quarter increases while in annual compounding, the interest is added at the end of the year.
Generally, for investment, the more frequent is it compounded the better. On the other hand, less frequent compounding is preferred for borrowers.
Answer:
The initial deposit should be of: $97,439.62
Explanation:
Giving the following information:
To replace the new machine when it wears out, the company wants to establish a savings account today. The interest rate on the account is 1.9 percent per quarter and the cost of the machinery is $325,000.
To calculate the initial investment required, we need to use a variation on the simple interest future value formula:
FV= PV*(1+i)^n
PV= present value
Isolating PV:
PV= FV/(1+i)^n
i= 0.019
n= 4*16= 64
FV= 325,000
PV= 325,000/ (1.019^64)= $97,439.62
