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tensa zangetsu [6.8K]
3 years ago
13

Bryant Company has a factory machine with a book value of $93,100 and a remaining useful life of 5 years. It can be sold for $27

,200. A new machine is available at a cost of $430,400. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $592,600 to $505,500. Prepare an analysis showing whether the old machine should be retained or replaced.
Business
1 answer:
NISA [10]3 years ago
6 0

Answer:

The old machine should be replaced.

Explanation:

Note: See the attached excel file for the the analysis showing whether the old machine should be retained or replaced.

From the attached excel file, the following calculation are made:

Variable Manufacturing cost of Retain = Initial Variable Manufacturing cost * remaining useful life of old machine = $592,600 * 5 = $2,963,000

Variable Manufacturing cost of Replace = New Variable Manufacturing cost * Remaining useful life of new machine = $505,500 * 5 = $2,527,500

From the attached excel, it can be observed that the total cost of Retain is $32,200 higher than the total cost of Replace. This therefore implies that the old machine should be replaced.

Download xlsx
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Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations:
krek1111 [17]

Answer:

$61

Explanation:

The computation of unit product cost for the month under absorption costing is shown below:-

Unit product cost = Direct material + Direct labor + Variable Manufacturing overhead + Fixed manufacturing cost

= $18 + $10 + $4 + ($255,200 ÷ 8,800)

= $61

Therefore for computing the unit product cost for the month under absorption costing we simply applied the above formula.

4 0
3 years ago
in marketable securities by $318,370 and paid $1,218,231 for new fixed assets during 2017. The company also repaid $776,200 of e
sertanlavr [38]

Answer:

The complete question from the start is <em>"Carla Vista Company increased its investments in marketable securities by $318,370 and paid $1,218,231 for new fixed assets during 2017"</em>

<em />

a. <u>Investing activities</u>

+ Proceeds from sales of marketable securities  $318,370

- Purchase of new fixed assets                              $1,218,231

+ Proceeds from sale of fixed assets                    <u> $332,002</u>

Net cash used for investing activities                 <u>-$567,859</u>

Note: The answer is cash outflow

b. <u>Financing activities</u>

- Repayment of long term debt                       $776,200

+ Proceeds from raising new debt capital      $913,575

- Repurchase of stock                                      <u>$52,501</u>

Net cash inflow from financing activities     <u>$84,874</u>

Note: The answer is cash inflow

8 0
2 years ago
Emery Mining Inc. recently reported $150,000 of sales, $75,500 of operating costs other than depreciation, and $10,200 of deprec
Lelechka [254]

Answer:

Net Income for the Period is $41,018.

Explanation:

                                            Emery Mining Inc.

                                    Statement of Profit or Loss

Revenue                                                                 $150,000

Operating Costs                                                       (75,500)        

Depreciation                                                             (10,200)

Earnings Before Interest and Tax                        $64,300

Interest Expense (16,500*7.25%)                                (1,196)

Earnings Before Tax                                                $63,104

Tax (35%)                                                                  (22,086)

Earnings After Tax OR Net Income                       $41,018

3 0
3 years ago
___________ change introduces a new practice to an organization but one that is not new to the industry.
aksik [14]

The answer would be Innovative.

7 0
2 years ago
You are evaluating two different silicon wafer milling machines. The Techron I costs $285,000, has a three-year life, and has pr
KonstantinChe [14]

Answer:

EAC Techron I = -$141,050

EAC Techron II = -$138,181

Explanation:

Techron I costs $285,000, has a three-year life, and has pretax operating costs of $78,000 per year. Salvage value $55,000, use straight line depreciation.

annuity factor = [1 - 1/(1 + r)ⁿ] / r = [1 - 1/(1 + 0.11)³] / 0.11 = 2.4437

depreciation expense per year = ($285,000 - $55,000) / 3 = $76,667

cash outflow years 1 and 2 = [($78,000 + $76,667) x (1 - 24%)] - $76,667 = ($154,667 x 0.76) - $76,667 = $40,880

cash outflow year 3 = [($78,000 + $76,667) x (1 - 24%)] - $76,667 - $55,000 = ($154,667 x 0.76) - $76,667 - $55,000 = -$14,120

NPV = -285,000 - 40,880/1.11 - 40,880/1.11² + 14,120/1.11³ = -285,000 - 36,829 - 33,179 + 10,324 = -344,684

EAC = NPV / annuity factor = -344,684 / 2.4437 = -$141,050

Techron II costs $495,000, has a five-year life, and has pretax operating costs of $45,000 per year. Salvage value $55,000, use straight line depreciation.

annuity factor = [1 - 1/(1 + r)ⁿ] / r = [1 - 1/(1 + 0.11)⁵] / 0.11 = 3.6959

depreciation expense per year = ($495,000 - $55,000) / 5 = $88,000

cash outflow years 1 through 4 = [($45,000 + $88,000) x (1 - 24%)] - $88,000 = ($133,000 x 0.76) - $88,000 = $13,080

cash outflow year 5 = [($45,000 + $88,000) x (1 - 24%)] - $88,000 - $55,000 = ($133,000 x 0.76) - $88,000 - $55,000 = -$41,920

NPV = -495,000 - 13,080/1.11 - 13,080/1.11² - 13,080/1.11³ - 13,080/1.11⁴ + 41,920/1.11⁵ = -495,000 - 11,784 - 10,616 - 9,564 - 8,616 + 24,877 = -510,703

EAC = NPV / annuity factor = -510,703 / 3.6959 = -$138,181

4 0
3 years ago
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