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Mazyrski [523]
3 years ago
7

One of two methods must be used to produce expansion anchors. Method A costs $80,000 initially and will have a $15,000 salvage v

alue after 3 years. The operating cost with this method will be $30,000 per year. Method B will have a first cost of $120,000, an operating cost of $8,000 per year, and a $40,000 salvage value after its 3-year life. At an interest rate of 8% per year, the present worth of Method B is closest to:
Business
1 answer:
MakcuM [25]3 years ago
4 0

Answer:

At an interest rate of 8% per year, the present worth of Method B is closest to:

=  $108,856.

Explanation:

a) Data and Calculations:

                                      Method A     Method B

Initial investment            $80,000     $120,000

Salvage value                    15,000        40,000

Period of investment       3 years        3 years

Annual operating costs $30,000       $8,000

Interest rate per year           8%               8%

Present value annuity factor = 2.577

Discounted present value factor = 0.794

Present worth:

                                                            Method B    Method A

Initial investment cost ($120,000 * 1) $120,000     $80,000

Operating costs = ($8,000 * 2.577) =     20,616         77,310

Salvage value = $40,000 * 0.794 =       (31,760)        (11,910)

Present worth =                                  $108,856    $145,400

b) Using the present worth analysis technique, Method B should be used to produce the expansion anchors, as it costs less than Method A.  The present worth analysis method is an equivalence method of discounting a project's cash flows to a single present value.  With this analysis, it becomes easier to determine the project that should be accepted or rejected based on their economic realities.

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Explanation:

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2- Economic uncertalinty

5- Technological change

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3 0
3 years ago
The period manufacturing costs of a company is comprised of $2,000,000 in direct materials, $1,000,000 in direct labor, and $500
shutvik [7]

Answer:

The Direct material cost per unit is = 285.714 per unit

The  Direct labor per unit is= 142.857 per unit

The Overhead cost per unit is  = 71.4285 per unit

Explanation:

Solution

We recall that:

The total direct material= $2000000

The total direct labor= $1000000

The units in products = 7000 units

The total Overheads= $500000

Now,

The direct materials on machinery is = $ 800,000(40%)

The direct labor on machinery  is= $ 600,000(60 %)

The machinery on overheard  is = $ 250,000(50 %)

The direct materials on assembly is  = $ 1200,000

The Direct labor on assembly is  = $ 400,000

The Overhead on assembly  is = $ 250,000

Thus,

The hybrid manufacturing cost statement is represented or shown below

Particular   Machinery (40%)in $     Assembly (60%)in $  Total in $

Now,

Particular = Direct material,

Machinery (40%)in $  = 800000

Assembly 60% in $ = 1200000

Total in $ =2000000

Grand total = 1650000

Particular = labor

Machinery (40%)in $  = 600000

Assembly 60% in $  = 400000

Total in $ = 1000000

Grand total = 1850000

Particulars = Overhead

Machinery (40%)in $ =250000

Assembly 60% in $ = 250000

Total in $ = 500000

Grand total = 3500000

Thus,

The Direct material cost per unit = 2000000/7000 = 285.714 per unit

The  Direct labor per unit = 1000000/700 = 142.857 per unit

The Overhead cost per unit = 500000/7 = 71.4285 per unit

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3 years ago
Suppose the current market price of corn is $3.75 per bushel. Your firm has a technology that can convert 1 bushel of corn to 3
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Answer:

At 1.783 or more, the conversion yield better gain than sales the corn

Explanation:

The ethanol conversion become attractive if the cost for doing the conversion are lower than the sale revenue for the product.

<u>total cost: raw materials + conversion cost</u>

corn price:           $  3.75

conversion cost:  $  1.60

Total cost:            $  5.35

<u>output: gallon of ethanol per bushel</u>

3 gallons of ethanol per bushel

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What information appears on a pay stub?
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Answer:

salary prior to taxes and tax deductions.

Explanation:

A pay stub usually referred to as a pay slip or paycheck stub is the financial document that lists the amount of money an employee is paid. It is generally issued by the employers for each

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Pay stub gives a detailed information about total earnings of an employee for the pay period, tax deductions from the total as well as the net pay after deductions.

Federal Insurance Contributions Act (FICA) is usually written on all pay stubs, which is an indication of an employee's contribution to Medicare and Social Security.

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