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melamori03 [73]
3 years ago
13

ACME labs bought a new inspection device for $182,730. The accounting department has estimated that the device will have an annu

alized capital cost of $42,442 per year for its 7-year service life. What salvage value was assumed in calculating the capital cost
Business
1 answer:
oksian1 [2.3K]3 years ago
7 0

Answer:

The salvage value taken is $16,368.34

Explanation:

ANSWER:

initial cost = $182,730

rate = 15%

n = 7 years

annualized capital cost = $42,442

salvage value = ?

first we will find the present worth.

annual worth = r * present worth / ( 1 - ( 1+ r) ^ - n)

42,442 = 15% * pw / ( 1 - (1+15%) ^ - 7)

42,442 = 0.15pw / ( 1 - (1.15) ^ -7)

42,442 = 0.15 pw / ( 1 - 0.37593)

42,442 = 0.15 pw / 0.6240

42,442 * 0.6240 = 0.15 pw

$26,486.48 = 0.15 pw

pw = $26,486.48 / 0.15

pw = $176,576.5343

pw also equals the initial investment + salvage value.

pw = initial investment + salvage value(p/f,i,n)

i = 15% , n = 7 years and pw will be taken negative here

-176,576.5343 = -182,730 + salvage value(p/f,15%,7)

-176,576.5343 +182,730 = salvage value(p/f,15%,7)

6,153.465 = salvage value * 0.3759

salvage value = 6,153.465 / 0.3759

salvage value = 16,368.34

so , the salvage value taken is $16,368.34

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3 years ago
During the first month of operations ended July 31, Western Creations Company produced 80,000 designer cowboy hats, of which 72,
bulgar [2K]

Answer:

Western Creations Company

1. Income Statements for July and August, under absorption costing:

                                               July                   August

Sales Revenue                $4,320,000.00    $4,320,000.00

Cost of goods sold            3,240,000.00      2,649,600.00

Gross profit                      $1,080,000.00     $1,670,400.00

Total selling & admin. exp. $169,000.00       $169,000.00

Net Income                          $911,000.00     $1,501,400.00

2. Income Statements for July and August, using variable costing:

                                                   July                   August

Sales Revenue                    $4,320,000.00    $4,320,000.00

Variable cost of goods sold  3,081,600.00       2,491,200.00

Contribution margin            $1,238,400.00     $1,828,800.00

Fixed expenses:

Total fixed costs                      345,000.00         345,000.00

Net income                           $893,400.00      $1,483,800.00

3a. The reason for the differences in the amount of the income from operations in in (1) and (2) for July is the cost of goods sold based on full manufacturing costs for (1) while only variable costs are considered for (2).

3b. The reason for the differences in the amount of the income from operations in (1) and (2) for August is also the cost of goods sold based on full manufacturing costs for (1) while only variable costs are considered for (2).

Explanation:

a) Data and Calculations:

Number of hats produced = 80,000

Number of hats sold = 72,000

Ending inventory = 8,000

1 Sales $4,320,000.00

2 Manufacturing costs:             July                    August

3 Direct materials                  $1,600,000.00    $1,280,000.00

4 Direct labor                           1,440,000.00       1,152,000.00

5 Variable manufacturing cost 240,000.00         192,000.00

6 Fixed manufacturing cost      320,000.00        320,000.00

Total manufacturing costs   $3,600,000.00  $2,944,000.00

Under absorption costing:

Unit cost = $45 ($3,600,000/80,000)             $36.80 ($2,944,000/80,000)

Cost of goods sold = $3,240,000 ($45*72,000) $2,649,600 (36.8*72,000)

Ending Inventory =         360,000 ($45*8,000)         294,400 ($36.8*8,000)

7 Selling and administrative expenses:

8 Variable                                 $144,000.00       $144,000.00

9 Fixed                                         25,000.00          25,000.00

Total selling & admin.  exp.     $169,000.00      $169,000.00

Under variable costing:

2 Manufacturing costs:

3 Direct materials                    $1,600,000.00     $1,280,000.00

4 Direct labor                             1,440,000.00        1,152,000.00

5 Variable manufacturing cost   240,000.00          192,000.00

8 Variable selling & admin cost   144,000.00          144,000.00

Total variable costs =             $3,424,000.00    $2,768,000.00

Unit variable cost = $42.80 ($3,424,000/80,000)     $34.60

Cost of goods sold = $3,081,600 ($42.80 * 72,000)  $2,491,200

Ending Inventory =         342,400 ($42.80 * 8,000)         276,800

6 Fixed manufacturing cost    $320,000.00            $320,000.00

9 Fixed selling & admin. cost      25,000.00                25,000.00

Total fixed costs =                   $345,000.00            $345,000.00

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Morrow City Inc. manufactures small flash drives and is considering raising the price by 75 cents a unit for the coming year. Wi
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Answer:

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Explanation:

                 Morrow City International

Analysis of the Current and Projected demand to determine the Operating Profit

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Less: Cost Price    $5.80           $5.80            0

Contribution           $2.7             $3.45            0.75

Margin

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Total                       $213,300     $248,400   $35,100

Contribution

Note: Total contribution = Unit sold * Contribution margin

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3 years ago
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