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kvasek [131]
4 years ago
15

Exercise 14-37 Special Order (LO 14-4, 14-5) [The following information applies to the questions displayed below.] Intercontinen

tal’s special order requires 1,300 kilograms of genotype, a solid chemical regularly used in the company’s products. The current stock of genotype is 9,900 kilograms at a book value of 9.20 p per kilogram. If the special order is accepted, the firm will be forced to restock genatope earlier than expected, at a predicted cost of 9.80 p per kilogram. Without the special order, the purchasing manager predicts that the price will be 9.40 p when normal restocking takes place. Any order of genatope must be in the amount of 6,600 kilograms. Exercise 14-37 Part 1 Required: 1. What is the relevant cost of genatope?
Business
1 answer:
FromTheMoon [43]4 years ago
5 0

Answer:

the relevant cost will also include the differential cost for taking the order as it is related to the order being taken or not.

Explanation:

The product is regularly used therefore, it will be sold in the future.

addtional inventory cost:

6,600 x (9.80 - 9.40) = 2,640

Cost of good sold

1,300 x 9.20              = 11,960

<u><em>Total cost for the order 14,600</em></u>

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Answer:

A) the demand for peanuts is inelastic          

Explanation:

Since in the question it is given that the price of peanuts is fall fro $3 to $2 per bushel which shows the decreased in price while at the same time the revenue received is also decreased from $16 to $14 that results in demand for peanuts is inelastic          

As we know that

Inelastic = When elasticity is less than one

So in the given case since the price and revenue received is decrease therefore the demand is inelastic

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3 years ago
Giant Machinery Ltd is considering to invest in one of the two following Projects to buy a new equipment. Each project will last
Nezavi [6.7K]

Answer:

a) Identify which project should the company accept based on NPV method.

  • Project 2 has a higher NPV = $98,960

b) Identify which project should the company accept based on simple pay back method if the payback criteria is maximum 2 years.

  • Project 2 has a shorter payback period = 2 years and 5 months

c) Which project Giant Machinery should choose if two methods are in conflict.

  • If two projects are in conflict, then you must choose the project based on their NPV.

Explanation:

                              Project 1      Project 2

Cost                      $175, 000    $185 ,000

Future Cash Flows

Year 1                     $76,000    $83,000

Year 2                    $67,000    $65,000

Year 3                    $55,000    $87,000

Year 4                    $78,000    $69,000

Year 5                    $65,000    $57,000

NPV:

Project 1 = -175000 + 76000/1.09 + 67000/1.09² + 55000/1.09³ + 78000/1.09⁴ + 65000/1.09⁵ = $91,090

Project 2 = -185000 + 83000/1.09 + 65000/1.09² + 87000/1.09³ + 69000/1.09⁴ + 57000/1.09⁵ = $98,960

Payback:

Project 1 = -175000 - 76000 - 67000 = 32000 after 2 years, then 32000 / 55000 = 7 months

Project 2 = -185000 - 83000 - 65000 =  37000 after 2 years, then 37000 / 87000 = 5 months

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The instance purchasing option that meets this requirement of physical isolation is Dedicated Hosts.

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A common resource is: a. a good that, when used by one person, leaves less for everyone else. b. likely to be overutilized. c. r
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An investor wishes to buy a new issue of U.S. Government agency bonds. You recommend that the customer purchase Federal Farm Cre
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Explanation: Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. Par value for a bond is typically $1,000 or $100. The market price of a bond may be above or below par, depending on factors such as the level of interest rates and the bond’s credit status. Par value for a share refers to the stock value stated in the corporate charter. Shares usually have no par value or very low par value, such as one cent per share. In the case of equity, par value has very little relation to the shares' market price.The par value mandate creates a subsequent legal liability that the shareholders of this stock contribute, at a minimum, this face value of the stock in order to fund the company. If the shareholders don't do so and the corporation requires the funds, these shareholders would be liable for the difference between the actual issue price and the face value, if the issue price is less than the face value, essentially “under par”.

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