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morpeh [17]
3 years ago
13

On January 1, James Industries leased equipment to a customer for a five-year period, at which time possession of the leased ass

et will revert back to James. The equipment cost James $830,000 and has an expected useful life of seven years. Its normal sales price is $830,000. The residual value after five years is $200,000. Lease payments are due on December 31 of each year, beginning with the first payment at the end of the first year. The interest rate is 8%. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Calculate the amount of the annual lease payments.
Business
1 answer:
nexus9112 [7]3 years ago
6 0

Answer:

James Industries

The amount of the annual lease payments is:

= $207,878.86.

Explanation:

a) Data and Calculations:

Cost of equipment = $830,000

Normal sales price = $830,000

Residual value after 5 years = $200,000

Interest rate = 8%

Lease period = 5 years

From an online financial calculator:

Loan Amount  830000

Loan Term  5  years

Interest Rate  8

Results:

Payment Every Year   $207,878.86

Total of 5 Payments   $1,039,394.29

Total Interest   $209,394.29

Lease Payment Schedule:

Period    PV                      PMT                      Interest           FV

1           $830,000.00     $-207,878.86   $66,400.00    $-688,521.14

2            $688,521.14     $-207,878.86    $55,081.69  $-535,723.98

3          $535,723.98     $-207,878.86    $42,857.92  $-370,703.04

4          $370,703.04     $-207,878.86    $29,656.24  $-192,480.42

5          $192,480.42     $-207,878.86     $15,398.43  $0.00

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Answer and Explanation:

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Total operating expense                   $31,273

Net income                                         $48,727

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Current   $16,800       0.01                  $168

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Total        $31,600                                $3,273

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Blanchard Company manufactures a single product that sells for $ 180 per unit and whose total variable costs are $ 126 per unit
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Answer:

Part 1

<u>Income Statement at 15,600 units</u>

Sales ($ 180 x 15,600)                                     $2,808,000

Less Variable Costs ($126 x 15,600)             ($1,965,600)

Contribution                                                        $842,400

Less Fixed Costs                                               ($842,400)

Net Income                                                                    $0

Part 2

$3,278,000

Explanation:

Break even (units) = Fixed Cost ÷ Contribution per unit

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                               = 15,600 units

<u>Assume the company's fixed costs increase by $ 141.000</u>

Break even (units) = Fixed Cost ÷ Contribution per unit

                               = ($ 842,400 + $ 141.000) ÷ ($ 180 - $126)

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Answer:

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Explanation:

<em>Predetermined overhead rate = Budgeted Overheads / Budgeted Activity</em>

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Finishing Department ($2.00 × 4)          $8.00

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Finishing Department ($3.75 × 13)        $48.75

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Cutting Department ($8.99 × 43)        $386.57

Finishing Department ($11.53 × 13)       $149.89

Total                                                   $2,058.46

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Answer:

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The supply chain system consists of the manufacturer and some independent entities such as distributors, wholesalers, warehousing service providers, transporters, and retailers.

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