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34kurt
3 years ago
14

Fancy Furniture produced a batch of 2,000 coffee tables at a cost of $355,000. It was discovered that the entire batch was finis

hed improperly. Fancy can sell the tables as seconds for $305,000 or spend an additional $315,000 to refinish them and sell them for $605,000. In deciding whether to rework the tables or sell them as is, management should:Compare the $305,000 proceeds from the sale of the tables as is, with the $355,000 cost of the tables.Compare the $605,000 possible revenue from refinished tables with the total cost of $355,000 plus $315,000 to refinish.Compare the $315,000 cost to refinish the tables with the incremental revenue of $300,000 if the tables are refinished.Eliminate any alternative that results in a loss on the sale of the product.
Business
1 answer:
mylen [45]3 years ago
6 0

Answer:

Compare the $315,000 cost to refinish the tables with the incremental revenue of $300,000 if the tables are refinished.

Explanation:

If the tables are sold now, they would cost $305000. If an additional $315000 is spent to refinish the table, the table would the be sold for $605000, that means there would be an additional revenue of $300000 ($605000 - $305000). The company are already operating at a loss as a result of improperly finishing the table. In deciding whether to rework the tables or sell them, the company should compare the $315,000 cost to refinish the tables with the incremental revenue of $300,000 if the tables are refinished.

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Cheryl is taking classes at an institution that offers face-to-face time with her instructor and classmates and also online time
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3 years ago
Scranton Shipyards has $20 million in total investor-supplied operating capital, and its WACC is 10%. Scranton has the following
Setler [38]

Answer: $400,000

Explanation: Given the following :

Operating Income (EBIT) = $4,000,000

Weighted average cost of Capital (WACC) = 10% = 0.1

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Taxes = 40% = 0.4

Economic Value Added (EVA) is given by;

EBIT x (1-Tax) - (WACC x Operating capital)

$4,000,000 × (1-0.4) - (0.1 × 20,000,000)

$4,000,000 × (0.6) - (2,000,000)

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6 0
3 years ago
Assume a $170,000 investment and the following cash flows for two products: Year Product X Product Y 1 $ 40,000 $ 60,000 2 60,00
Arturiano [62]

Answer:

a. Product X = 3.50 years

   Product Y = 3.25 years

b. Product Y

Explanation:

The cash flows for the two products as well as the balance at the end of each year is given as follows:

Initial\ balance = -170,000\\\\\begin{array}{ccccc}Year&Product\ X&Product\ Y& Balance\ X& Balance\ Y\\1&40,000&60,000&-130,000&-110,000\\2&60,000&70,000&-70,000&-40,000\\3&50,000&30,000&-20,000&-10,000\\4&40,000&40,000&20,000&20,000\end{array}

For both products, the payback period is reached between the third and fourth year.

Product X:

Payback = 3+\frac{20,000}{40,000} = 3.50\ years

Product Y:

Payback = 3+\frac{10,000}{40,000} = 3.25\ years

Under the payback method, the alternative that presents the shortest payback period should be selected. Therefore, Product Y should be selected.

3 0
3 years ago
;-; What does this mean ;-;
Scorpion4ik [409]
What does anything mean⇔
5 0
3 years ago
Read 2 more answers
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