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Radda [10]
3 years ago
7

A company buys tracking software for its warehouse which, along with the computer system and ancillaries to run it, will cost $1

.6 million. This purchase will be deducted over five years. It is expected that the software will reduce inventory by $10.7 million at the end of the first year after it is installed, though there will be an annual cost of $120,000 per year to run the system. If the company's marginal tax rate is 40%, how will the purchase of this item change the company's free cash flows in the first year
Business
1 answer:
koban [17]3 years ago
6 0

Answer:

The company's free cash flows in the first year will be of $10.756 million

Explanation:

In order to calculate how will the purchase of this item change the company's free cash flows in the first year we would have to calculate the following:

free cash flows = inventory reducing - aftertax annual cost + depreciation tax shield

inventory reducing = $10.7  million

aftertax annual cost = 0.12*(1-40%) = $0.072

depreciation tax shield = 1.6/5*40% = $0.128

Therefore, free cash flows =$10.7 - $0.072 + $0.128 = 10.756

free cash flows =$10.756 million

The company's free cash flows in the first year will be of $10.756 million

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Department a had 5,000 units in work in process that were 60% completed as to labor and overhead at the beginning of the period;
mezya [45]
The answer for Equivalent units for the period will be calculated as follows under FIFO
1. Units from beginning work in process:  calculate this as beginning work in process units x (100% – given % complete) to calculate the amount of additional work needed to make the unit 100% complete.2. Units in progress and completed this period:  take the units x 100% complete since they were started and completed they have received all of their materials, labor and overhead and will not receive any more since they are finished.3. Units in Ending work in process:  take the ending work in process units x a given % complete.

Solution by step:

Equivalent units = 1. (5,000 × 40%) +2. (31,000 – 5,000) (Since there is a beginning work in process deduct this from the units completed) +3. (2,000 × 80%)

= 2000 + 26000 + 1600
Answer = 29,600 units
5 0
4 years ago
Does 3d rendering service popular nowaday?
attashe74 [19]

Answer: no

Explanation:

Because

4 0
3 years ago
Zeke Company sells 25,000 units at $21 per unit. Variable costs are $10 per unit, and fixed costs are $75,000. The contribution
Irina18 [472]

Answer:

A. 52% and $11 per unit

Explanation:

The contribution margin ratio is a measure of how much of a business revenue is available for covering its variable expenses. It also reveals how much is left to cover its fixed cost. The contribution margin is the unit income generated from each product sold. To calculate contribution margin ratio we divide contribution margin by sales. i.e

Contribution margin ratio = (contribution margin)/sales

Contribution margin = (sales - variable expenses)/sales

OR

contribution margin = (selling price - average variable cost)/ selling price

Since selling price is $21 and average variable cost is $10

contribution margin = (21 - 10)/21

= 11/21

=52.38% or 0.5238

Contribution margin = $21 - $10

= $11

thus,   A. 52% and $11 per unit is the answer.

variable cost per unit also means average variable cost.

5 0
4 years ago
Illinois Company is attempting to develop the cost function for repair costs. The following past data are available: Machine Hou
Harlamova29_29 [7]

Answer:

$480

Explanation:

Data provided in the question:

Machine              Hours Repair Costs

2,400                       $6,385

1,200                        $3,480

2,000                       $5,285

3,400                       $8,980

Now,

                       Machine              Hours Repair Costs

Highest             3,400                       $8,980

Lowest              1,200                        $3,480

Difference        2,200                       $5,500

Unit variable cost =  $5,500 ÷ 2,200

= $2.5

Total cost at high level = $8,980

Machine hours highest level = 3,400

Also,

Total cost at high level = Fixed cost + Variable cost at highest level

or

$8,980 = Fixed cost + [ $2.5 × 3,400 ]

or

Fixed cost = $8,980 -  [ $2.5 × 3,400 ]

= $8,980 - $8,500

= $480

7 0
3 years ago
Most businesses in the United States are a. corporations b. proprietorships c. separate entities d. partnerships
Yanka [14]

Answer and Explanation:

b. proprietorships

4 0
3 years ago
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