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Rasek [7]
3 years ago
7

Charlie Corporation is considering buying a new donut maker. This machine will replace an old donut maker that still has a usefu

l life of 6 years. The new machine will cost $3,800 a year to operate, as opposed to the old machine, which costs $4,300 per year to operate. Also, because of increased capacity, an additional 22,000 donuts a year can be produced. The company makes a contribution margin of $0.10 per donut. The old machine can be sold for $9,000 and the new machine costs $32,000. The incremental annual net cash inflows provided by the new machine would be (Ignore income taxes.): Multiple Choice $2,700 $500 $2,200 $6,800
Business
1 answer:
Doss [256]3 years ago
3 0

Answer:

$2,700

Explanation:

Data provided

New machine cost = $3,800

Old machine cost = $4,300

Additional donuts = 22,000

Contribution margin per unit = $0.10

The computation of Incremental annual net cash flows is as shown below:-

Incremental annual net cash flows = Operating cost saving per year + Additional contribution Margin provided by new donuts maker

= ($4,300 - $3,800) + (22,000 × $0.10)

= $500 + $2,200

= $2,700

Therefore for computing the incremental annual net cash flows we simply applied the above formula.

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<span>Assuming that we consider the standard workday of eight hours, each part would take 18.75 minutes per part completion. In order to complete 1,250 parts, it would take 8.33 days to complete. In order to complete the 1,250 parts, the manufacturer would have to create at least eight work stations to meet the daily demand.</span>
7 0
3 years ago
A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ord
Marianna [84]

Answer:

the total cost of ordering and holding sugar is $1,000 per year

Explanation:

<em>Step 1 Calculate the Economic Order Quantity(EOQ).</em>

EOQ = √(2×Total Demand×Ordering cost)/ Holding Cost per Unit

        = √(2×250×20×5)/20

        = 50

<em>Step 2 Calculate the total  cost of ordering and holding sugar</em>

Total cost = Ordering Cost + Holding Cost

                = (250×20)/50 × $5 + 50/2 × $20

                = $500+$500

                = $1,000

Therefore,  the total cost of ordering and holding sugar is $1,000 per year

3 0
3 years ago
A corporation​ ________. A. can use straightdash-line depreciation method for tax purposes and MACRS depreciation method financi
lara31 [8.8K]

Answer:

The correct answer is B. can use different depreciation methods for tax and financial reporting purposes.

Explanation:

Corporations are allowed to use various depreciation methods (in a straight line, double decreasing balance and the sum of the digits of the years). For fiscal purposes, using the MACRS recovery periods, the assets of the first four classes of property are depreciated using the double declining balance method.

7 0
3 years ago
Over the years, O'Brien Corporation's stockholders have provided $20,000,000 of capital, when they purchased new issues of stock
shepuryov [24]

Answer:

$13,000,000

Explanation:

Given that,

Total Book Value of Equity = $20,000,000

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Selling price per share = $33.00

Market value of equity:

= Selling price per share × Shares outstanding

= $33.00 × 1,000,000

= $33,000,000

O'Brien's MVA:

= Market value of equity - Total Book Value of Equity

= $33,000,000 - $20,000,000

= $13,000,000

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2 years ago
__ are products that have low immediate appeal but may benefit consumers in the long run.
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Salutary products are products that have low immediate appeal but may benefit consumers in the long run.

<h3>What is Long Run?</h3>

There is a time frame known as the long run during which all cost and production elements are erratic. In the long run, businesses modify every expense, but in the short term, they can only affect prices by changing their production levels. A company may also anticipate competition in the long run, even though it may currently have a monopoly in the near term.

A long run is a span of time during which a manufacturer or producer can make production-related decisions with some latitude. Depending on the predicted profits, businesses can either increase or decrease their production capacity, or enter or leave a certain industry.

In order to achieve an equilibrium between supply and demand, firms that look at the long term understand that they cannot change output levels.

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7 0
1 year ago
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