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olya-2409 [2.1K]
3 years ago
14

Investing $1,500,000 in TQM's Channel Support Systems initiative will at a minimum increase demand for your products 1.7% in thi

s and in all future rounds. (Refer to the TQM Initiative worksheet in the CompXM Decisions menu.) Looking at the Round 0 Inquirer for Andrews, last year's sales were $163,712,225. Assuming similar sales next year, the 1.7% increase in demand will provide $2,783,108 of additional revenue. With the overall contribution margin of 34.2%, after direct costs this revenue will add $951,823 to the bottom line. For simplicity, assume that the demand increase and margins will remain at last year's levels. How long will it take to achieve payback on the initial $1,500,000 TQM investment, rounded to the nearest month
Business
1 answer:
vagabundo [1.1K]3 years ago
6 0

Answer:

Payback is 19 months

Explanation:

It is a capital budgeting problem. Firm has invested in TQM's Channel Support systems of $1,500,000. It will increase demand of product by 1.7%.

$166385985 x1.7071. = $166389948

Last years sales revenue was $163,608,638. A 1.7% increase will mean the saleswill be -

$166385985- $163608638 = 2781347

Thus increase in sales revenue is-

Now consider contribution margin. From total sales direct variable costs are deducted to get total contribution. It is 34.2% . So extral contribution due to 1.7% increase in sales is-

$2781347 x 34/2%= $95122

Thus increase in contribution margin will also increase profit to the same extent as there is no addition in fixed cost due to this project. So firm will be able to recover $951,221of initial investment of $1,500,000 in one year. Pay back is the time required to recover this full initial investment. It ascertained by dividing $1,500,000 amount by the net addition in profit per year. Answer is-

1,500,000+ 951221= 1.6759yrs x12months= 19months

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Barney, a manager, is very conventional, resistant to change, habitual, and does not accept new ideas very easily. This implies
xxMikexx [17]

Answer:

This implies or states to low openness to experience

Explanation:

Low openness to experience, it is related to people who are mostly dedicated to work they do and make sure that their tasks or work through to the end.

So, in this case, Barney, who is the manager is very resistant to adapt the change, very conventional and does not accept the new ideas so easily. This states that the manager, is very low for experiencing the openness or to the new ideas.

4 0
3 years ago
You want to purchase a new condominium that costs $325,000. Your plan is to pay 20 percent down in cash and finance the balance
alekssr [168]

The monthly mortgage payment including principal and interest is $1,936.25

Explanation:

PV = (1 - 0.20) × $325,000 = $260,000‬

r = 0.041 / 12

t = 15 * 12 = 180

C = \frac{PV}{\frac{1- [\frac{1}{(1+r)^{t} } ] }{r}}

C = $260,000‬ ÷ [1 - {1 / (1 + 0.041 / 12)∧180} / (0.041 / 12)]

C =  $1,936.25

The monthly mortgage payment including principal and interest is $1,936.25

7 0
3 years ago
Month Maintenance Machine Health Number of Shipping Units
8_murik_8 [283]

Answer:

1. Variable cost = Shipping costs

Fixed cost = Health Insurance

Mixed cost = Maintenance costs

Shipping costs are variable because a unit shipped costs $3.60. The total shipping cost for each month varies according to the units shipped in the month.

Health Insurance costs are fixed as there is no change in cost notwithstanding the number of employees in each month.  The total health insurance cost remains the same every month.

Maintenance costs are mixed for each month, as there is a fixed element and a variable element.

2. Cost function for each cost:

Maintenance = $4,200 + $2.10 per machine hour

Health Insurance = $8,600

Shipping cost = $3.60 per unit

3. Cost function = $12,800 + $2.1m + $3.6s

where m = machine hours

and s =  units shipped

4. The total operating cost for the month

= $46,040

Explanation:

a) Data and Calculations:

Month     Maintenance Machine  Health   Number of  Shipping     Units

                     costs        Hours  Insurance  Employees   Costs    Shipped

January          4500       165         8600            68            25778       7160

February        4452       120         8600            75           29664      8240

March            4600       230        8600            92            28674      7965

April               4850        318        8600           105           23058      8405

May                5166       460        8600            89            21294       5915

June              4760       280        8600            87            33282      9245

July                4910       340        8600            93             31428      8730

August         4960       360        8600            88            30924       8415

September  5070       420         8600            95             25110     6975

October      5250       495         8600           102           25866      7185

November   5271        510         8600            97             20124    5590

December  4760       275         8600            94            34596     9610

Cost Function for each cost:

Maintenance cost:

                     Machine Cost

                        Hours

November         510    5271

February           120    4452

Difference       390      819

Variable cost = $2.10 (819/390)

Fixed cost = $4,200 ($5,271 - ($2.10*510))  

Health Insurance:

Fixed cost = $8,600

Shipping cost:

Variable cost = $3.60 per unit

Cost function = $4,200 + $2.10m + $8,600 + $3.60s

= $12,800 + $2.1m + $3.6s

February cost = $12,800 + $2.1(120) + $3.6(8240)

= $12,800 + $252 + $29,664

= $42,716

IF:

Machine hours = 400

Employees = 80

Shipped units = 9,000

The total operating cost for the month will be:

Cost function = $12,800 + $2.1m + $3.6s

= $12,800 + ($2.1 * 400) + ($3.6 * 9,000)

= $12,800 + $840 + $32,400

= $46,040

4 0
3 years ago
What term means the unused option when deciding how to use one's<br> resources.
andrezito [222]

Answer:

Opportunity cost

6 0
2 years ago
Jacob needed money for some unexpected expenses, so he borrowed $5,890.25 from a friend and agreed to repay the loan in seven eq
Anna11 [10]

Answer:

OPTION C i.e 11%

Option A i.e 30.55 year

Explanation:

we know that capital can be calculated as

Capital = EMI \times PVIFA

capital = EMI \times \frac{(1+r))^n -1}{r (1+r)^n}

from the data given in question we can calculate the value of r

so

5890.2 = 1250 \times \frac{(1+r))^7 -1}{r (1+r)^7}

4.7122 = \frac{(1+r))^7 -1}{r (1+r)^7}

solving for r we get

r = 11%

option C

we know that

Total\ saving  =  cash flow \times FVIFA

                      = Cash\ flow \times \frac{(1+r)^n -1}{r}

from the data given we can evealueate the value of n

8,452,622 = 40,000 \times \frac{(1.11)^n -1}{0.11}

\frac{8452622}{40000}\times 0.11 = (1.11)^n -1

solving for n we get

n = 30.55 year.

Option A

4 0
3 years ago
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