Answer and Explanation:
Revenue $160,000
Rental Costs $30,000
Variable Costs $50,000
Depreciation $10,000
Profit before tax $70,000
Tax(35%) $24,500
Net Income $45,500
Operating cash flow
a) Dollars in minus dollars out
Revenue ? rental costs ? variable costs ? taxes = $160000 -$30000-$50000-$24,500 = $55,500
b) Adjusted accounting profits
Operating cash flow = Net income + depreciation = $45,500 + $10,000 = $55,500
c) Add back depreciation tax shield
Operating cash flow = [(Revenue ? rental costs ? variable costs) × (1 ? 0.35)] + (depreciation × 0.35)]
= ($160,000-$30000-$50,000)*0.65 + $10,000*0.35 = $55,500
Yes, the above approaches result in the same value for cash flow
Answer:
transfer price 3.31
Explanation:
the minimun transfer price should be equal to the marginal cost:
In this case: variable manufacturing cost + shipping cost.
variable cost 3.1
shipping cos 0.21
marginal price 3.31 = cost of produce an additional unit = transfer price
there is no additional fixed cost so this should be the transfer price.
Answer:
total cost of mine = $1,400,000 + $400,000 = $1,800,000
estimed number of tons of ore = 1,000,000
residual value of land at the end of the mine = $200,000
depletion expenses per ton of ore = ($1,800,000 - $200,000)/1,000,000
= $1,600,000/1,000,000
= $1.6/ton
total depletion expenses for the first year = Ddepletion expenses per ton x number of ton of ore produced
= $1.6 x 180,000
= $288,000
Explanation:
