1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
inessss [21]
3 years ago
14

You were appointed the manager of Drive Systems Division (DSD) at Tunes2Go, a manufacturer of portable music devices using the l

atest developments in hard drive technology, on December 15 last year. DSD manufactures the drive assembly, M-24, for the company's most popular product. Your bonus is determined as a percentage of your division's operating profits before taxes.
One of your first major investment decisions was to invest $6.0 million in automated testing equipment for the M-24. The equipment was installed and in operation on January 1 of this year.

This morning, J. Bradley Finch III, the assistant manager of the division (and, not coincidentally, the grandson of the company founder and son of the current CEO) told you about an offer by Pan-Pacific Electronics. Pan-Pacific wants to rent to DSD a new testing machine that could be installed on December 31 (only two weeks from now) for an annual rental charge of $1,410,000. The new equipment would enable you to increase your division's annual revenue by 8 percent. This new, more efficient machine would also decrease fixed cash expenditures by 7 percent.

Without the new machine, operating revenues and costs for the year are estimated to be as follows. Sales revenue and fixed and variable operating costs are all cash.
Sales revenue $ 9,010,000
Variable operating costs 1,140,000
Fixed operating costs 4,380,000
Equipment depreciation 970,000
Other depreciation 760,000

Would you rent the new aquipment?
Business
1 answer:
Volgvan3 years ago
3 0

Answer:

Answer is explained below.

Explanation:

A.

Assume the new testing equipment is rented and installed on December 31 and impact on this year's divisional operating profit

Loss from equipment write-off

Sales revenue 9,820,000    

Operating costs:    

Variable -1,190,000    

Fixed (cash expenditures) -4,390,000    

Equipment depreciation -960,000    

Other depreciation -710,000    

Loss from equipment write-off -5,040,000    

Operating profit (loss) before taxes

Operating profit (loss) before taxes=-$2,470,000(Loss)

Loss from equipment write-off= Value of equipment -Equipment Depreciation =$6,000,000-$960,000=$5,040,000

B.

Assume the new testing equipment is rented and installed on December 31. and the impact on next year's divisional operating profit

Sales revenue 9,820,000+690,900=10,510,900 Add 7% of 9,820,000=690,900  

Operating costs:    

Equipment rental -1,370,000    

Variable -1,190,000    

Fixed cash expenditures -4,390,000+263,400=-4,126,600 6%of 4,390,000=263400  

Equipment depreciation -960,000    

Other depreciation -710,000    

Operating profit (loss) before taxes 2,154,300(Profit)  

C.

Would you rent the new equipment - Yes Because it is benificial for Company as it is earning profit of $2,154,300

You might be interested in
There is a need to develop theories about what kind of fraud has occurred.
Mashcka [7]
A fraud in general terms refers to a wrongful or criminal deception intended to result in a financial or personal gain. This kind of acts should be more observe especially to those people that are done by the wrongful act and theories and some investigation should be done in order to counter the next incident that might happen with the same kind of fraud.
4 0
3 years ago
A company planned to sell 100 canoes for the month of April at an average sales price of $600. Midway through the month, the com
andreyandreev [35.5K]

Answer:

flexible budget amount for canoe sales revenue for April is $72000

Explanation:

given data

sell =  100 canoes

average sales price = $600

sold = 65

total sales = 130

canoes at an average price = $595

actual sales = 120 canoes

to find out

flexible budget amount for canoe sales revenue for April

solution

we know here for flexible budget april sale unit are = 120

and selling price is $600

so that April sales will be here = 120 × 600

April sales = 72000

so flexible budget amount for canoe sales revenue for April is $72000

3 0
2 years ago
Nadell Corporation reported the following data for the month of AprilInventory Beginning Ending Raw Materials $30,000 $32,000 Wo
jeyben [28]

Answer:

COGS= $181,000

Explanation:

Giving the following information:

Beginning Finished Goods= $39,000

Ending Finished Goods= $53,000

Cost of goods manufactured= 234,000 - 39,000= $195,000

<u>To calculate the cost of goods sold, we need to use the following formula:</u>

COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 39,000 + 195,000 - 53,000

COGS= $181,000

7 0
2 years ago
You are planning your retirement in 10 years. You currently have $169,000 in a bond account and $609,000 in a stock account. You
Over [174]

Answer:

$187,584.20

Explanation:

Firstly, we need to calculate the total future value (FV) of the bond account and stock account after 10 year from now (when you come to retirement age):

FV_bond at retirement = 169,000 x (1 + 7.25%)^10 + 7,100 x (1 + 7.25%)^9 + 7,100 x (1 + 7.25%)^8 + … 7,100 x (1 + 7.25%)^0 = 426,230.93

FV_stock at retirement = 609,000 x (1 + 10.75%)^10 = 1,690,653.63

Total FV of your investment portfolio = 2,116,884.57

Because you plan to use up all the funds in your account after 21 equal amount withdrawals after retirement, total present value <em>(at the time you retire not now)</em> of these withdrawals <em>(discounted at 6.5%)</em> have to be equal to the value of your invesment 10 years from now, or:

2,116,884.57 = C/(1+6.5%) + C/(1+6.5%)^2 + … + C/(1+6.5%)^21, with C is the amount you plan to withdraw each year.

Solve the equation we get C = 187,584.20

<em>Note: The equation can be solved easily using Excel or BAII Plus.</em><em> </em>

5 0
3 years ago
How much can Azco Autosystems, Inc., afford to spend on an energy management system if the software will save the company $21,30
ivann1987 [24]

The amount that that  Azco Autosystems, Inc.,  can afford to spend on an energy management system is $80,744.

<h3>Present value</h3>

Using this formula

Present Value = A(P/A, 10%, 5)

Where:

A=$21,300

(P/A, 10%, 5)=3.79079

Let plug in the formula

Present Value = 21,300 (P/A, 10%,5)

Present Value = 21,300 (3.79079)

Present Value =80,743.8

Present Value = $80,744 (Approximately)

Inconclusion the amount that that  Azco Autosystems, Inc.,  can afford to spend on an energy management system is $80,744.

Learn more about present value here:brainly.com/question/15904086

4 0
2 years ago
Other questions:
  • Escribir write a conversation between a mechanic and a customer with car problems.
    12·1 answer
  • Think of a time you encountered an ethical dilemma. What was the situation? How did you react? Do you behave ethically? How do y
    13·1 answer
  • A broker-dealer tells a customer that it is willing to buy a stock at $20 and is willing to sell that same stock at $21. this is
    13·1 answer
  • Sales of the cooler freeze packs made by the company Coolpaxx have been declining. Online sales information is shared with the s
    8·1 answer
  • Kenneth Chenault, the CEO of American Express Co. hopes to issue American Express cards through U.S. banks. At present, banks th
    14·1 answer
  • Which of the following is true of innovation? a. Innovations are less likely to come from small businesses than from big busines
    13·1 answer
  • files kept within a department are -------------- files a. decentralized b. transactional c. direct access d. centralized
    11·1 answer
  • The Golden Gate bridge is maintained by 17 ironworkers, who replace corroding steel and rivets, and 38 painters. If the painters
    5·1 answer
  • Tirri Corporation has provided the following information: Cost per UnitCost per PeriodDirect materials$ 7.05 Direct labor$ 4.20
    6·1 answer
  • An industry consists of three firms with sales of $300,000, $700,000, and $250,000. a. Calculate the Herfindahl-Hirschman index
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!