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grandymaker [24]
3 years ago
7

Activity-Based Product Costing

Business
1 answer:
nikklg [1K]3 years ago
5 0

no matteehow much times i read this is still cant process this

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You are considering replacing your aging propane furnace for a natural gas model. The propane model originally cost $2,200, will
Nat2105 [25]

Answer:

The information is not complete (we do not know the useful life of the propane model), but the difference in costs between one project and the other is two large. The NPV of the savings for the gas model almost pays for the initial investment, plus the present value of the costs of using the gas model are much lower for future equivalent projects, we can assume that replacing the propane furnace with the gas model is a good investment.

We cannot determine exactly by how much the actual worth of the costs of the gas model are lower than the costs of the propane model, but there is no doubt that they are much lower. The only way that the propane model would have lower actual costs would that its useful life is much longer.

Explanation:

                                             use propane model            use gas model

initial investment                         $0                                     $1,800

operating costs                         $800                                    $600

useful life                                 6 years                                 13 years

present value of the costs for first product life cycle:

                                                $3,559 (6 years)              $6,129 (13 years)

Since the useful lives of the alternatives are not the same, we must find a common denominator for the useful life of the alternatives. Here we have a problem because we are not given the information.

But we can assume that the useful life of a propane furnace is also 13 years:

                                             use propane model            use gas model

initial investment                    $2,200                                  $2,200

operating costs                         $800                                    $600

useful life                                 13 years                                 13 years

residual value                            $0                                        $500

present value of total costs per life cycle:

                                                $8,190                                   $6,529

Now we need to determine the NPV of the money saved by using gas propane = -$140 (-$1,800, 9%, $200 saved during 12 periods and $700 received at last period), so basically the gas model almost pays for itself with the money it saves.

5 0
3 years ago
A low-cost leader can translate its low-cost advantage over its rivals into superior profit performance by
sashaice [31]

Answer:

either using its low-cost edge to underprice competitors and attract price sensitive buyers in large enough numbers to increase total profits or refraining from price-cutting and using the low-cost advantage to earn a bigger profit margin on each unit sold.

Explanation:

Competitive advantage is the edge that a firm has over others in the same industry that results in higher profit margins for them.

One of the importance competitive advantages is price advantage.

This results from the firm being a low cost leader. Their cost of production is low enough for them to attract customers that are price sensitive leading to increased profits.

Also they can underprice their competitors or earn profit margins on the reduced cost of production per unit

5 0
3 years ago
Read 2 more answers
Which of the following would be considered an appraisal cost of quality?
mars1129 [50]
Purchasing better tools for workers to perform their jobs
4 0
3 years ago
At the beginning of 2020, Concord Company acquired a mine for $3,251,600. Of this amount, $124,000 was ascribed to the land valu
Sav [38]

Answer:

A. $737,520

B. $530,320

Explanation:

a. Computation for the total amount of depletion for 2020.

First step is to calculate the Depletion Rate

Depletion Rate = ($3,251,600 - $124,000 + $49,600 + $210,800)/12,100,000

Depletion Rate= $3,388,000/ 12,100,000

Depletion Rate= 0.28

Now let calculate the total amount of depletion for 2020.

2020 Total amount of depletion= 0.28 × $2,634,000

2020 Total amount of depletion= $737,520

Therefore the total amount of depletion for 2020 is $737,520

B. Computation for the amount that is charged as an expense for 2014 for the cost of the minerals sold during 2020.

Expense amount charged= ($737,520/$2,634,000)* 1,894,000

Expense amount charged=0.28 *1,894,000

Expense amount charged=$530,320

Therefore the amount that is charged as an expense for 2014 for the cost of the minerals sold during 2020 is $530,320

7 0
3 years ago
According to PCN analysis, which process region includes process steps in which one participant is acting on another participant
mamaluj [8]

Options:

A. Independent processing

B. Surrogate Interaction

C. Direct interaction

D. Resource processing

E. Process domain Interaction.

Answer:B. Surrogate Interaction

Explanation:

PCN(preassigned control number) PROGRAM is a program system designed to allow the Library of Congress to assign control numbers in advance of a publication to those titles which may be included to collections of materials in the Library. PCN number is only assigned to publishers in the United States of America.

Surrogate Interaction is a type of Interaction taking place in a PCN program where there are no direct interaction.

3 0
3 years ago
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