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kirza4 [7]
3 years ago
6

Sloan Transmissions, Inc., has the following estimates for its new gear assembly project: price = $2,800 per unit; variable cost

s = $560 per unit; fixed costs = $3.0 million; quantity = 86,000 units. Suppose the company believes all of its estimates are accurate only to within ±10 percent. What values should the company use for the four variables given here when it performs its best-case scenario analysis? What about the worst-case scenario?
Business
1 answer:
babymother [125]3 years ago
6 0

Answer:

- Values the company should use for the four variables when it performs its best-case scenario analysis:

+ Price = 3,080 per unit;

+ Variable costs = $504 per unit;

+ Fixed cost = $2.7 million;

+ Quantity = 94,600 units.

- Values the company should use for the four variables when it performs its worst-case scenario analysis:

 + Price = 2,520 per unit;

+ Variable costs = $616 per unit;

+ Fixed cost = $3.3 million;

+ Quantity = 77,400 units.

Explanation:

- Under the best-case scenario analysis, price and quantity should be given the highest ( thus the best) estimates while variable costs and fixed costs should be given the lowest ( thus the best) estimates. So, we have:

+ Price = 2,800 x 1.1 = 3,080 per unit;

+ Variable costs = 560 x 0.9 = $504 per unit;

+ Fixed cost = 3 million x 0.9 = $2.7 million;

+ Quantity = 86,000 x 1.1 = 94,600 units.

- Under the worst-case scenario analysis, price and quantity should be given the lowest ( thus the worse) estimates while variable costs and fixed costs should be given the highest ( thus the worst) estimates. So, we have:

+ Price = 2,800 x 0.9 = 2,520 per unit;

+ Variable costs = 560 x 1.1 = $616 per unit;

+ Fixed cost = 3 million x 1.1 = $3.3 million;

+ Quantity = 86,000 x 0.9 = 77,400 units.

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Answer:

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Amortization Expenses:

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3. BLUESTONE COMPANY

Income Statement (partial)

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Amortization Expenses:

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Balance sheet (partial)

At December 31

Intangibles:

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Explanation:

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Answer:

See explanation section

Explanation:

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    Statement of cash flow (Direct Method)

   For the year ended, December 31, 2018

        Particulars                                                $

<em>Cash flow from operating activities</em>

Cash from customers (1)         203,000

Cash from dividends (2)              <u>2,000</u>

Cash inflow                                               205,000

Cash paid to suppliers (3)       (118,000)

Cash paid to employees (4)    (28,000)

Cash paid for interest (5)          (6,000)

Cash paid for taxes (6)             (18,000)

Cash outflows                                          <u>(170,000)</u>

Net cash used by operating activities   $35,000

<em>Cash flow from investing activities</em>

Sale of assets                            7,000

Purchase of plant asset          (15,000)

Purchase of long-term investment

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Dividends paid (8)                  (27,000)

Issued bonds (7)                      26,000

Purchase of treasury stock     (8,000)

Net cash used by financing activities <u>  $(9,000)</u>

Net changes in cash                                 $13,000

Add: Cash at the beginning                 <u>    $20,000</u>

Cash at the end of period                      $33,000

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