All categories

7 days ago

Pavelko Corporation has provided the following data for its two most recent years of operation: Manufacturing costs: Variable ma

nufacturing cost per unit produced: Direct materials $ 13 Direct labor $ 5 Variable manufacturing overhead $ 5 Fixed manufacturing overhead per year $90,000 Selling and administrative expenses: Variable selling and administrative expense per unit sold $ 6 Fixed selling and administrative expense per year $61,000 Year 1 Year 2 Units in beginning inventory 0 1,000 Units produced during the year 10,000 9,000 Units sold during the year 9,000 8,000 Units in ending inventory 1,000 2,000 The unit product cost under absorption costing in Year 1 is closest to:

Business

You might be interested in

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose machine. The

Katen [3525]

Answer:

a. What is the initial investment at t=0?

-$90,000

b. What is the Cash Flow at year 1?

$33,950

c. What is the Cash Flow at year 3?

$40,270

d. What is NPV?

$1,788.50

Explanation:

Initial investment amounts to $90,000

Annual depreciation calculated using straight-line depreciation method = $90,000 / 3 = $30,000

Year 1 cash flow = [($40,000 - $5,000 - $30,000) × 0.79] + $30,000 = $33,950

Year 2 cash flow = [($45,000 - $6,000 - $30,000) × 0.79] + $30,000 = $37,110

Year 3 cash flow = [($50,000 - $7,000 - $30,000) × 0.79] + $30,000 = $40,270

Using an Excel spreadsheet, I calculated the NPV = $1,788.50

3 0

2 months ago

Which of the following cannot be considered a benefit of implementing HACCP?

Katen [3525]

Answer: employee turnover

3 0

2 months ago

Zan Azlett and Angela Zesiger have joined forces to start A&Z Lettuce Products, a processor of packaged shredded lettuce f

Scilla [3833]

Answer:

a. The break-even quantity in units for manual process= 26,786 bags

b. $80,358

c. 36,000 bags

d. $108,000

e. $53,000

f. $58,000

g. 26,786 bags

h. mechanized process, manual process.

Explanation:

a. The calculation for break-even quantity is carried out using the formula

Fixed Costs ÷ (Revenue per Unit – Variable Cost per Unit)

= $ 37, 500 ÷ $3 - $1.60

= 26,786

b. The break-even point in sales dollars is found using the formula

Break-Even Point (sales dollars) = Fixed Costs ÷ Contribution Margin

with Contribution Margin defined as Price of Product – Variable Costs

= $37,500 ÷ ($3 - $1.60)

= 26,786 x $3= $80,358

c. The break-even quantity for the mechanized process can be calculated by

Fixed Costs ÷ (Revenue per Unit – Variable Cost per Unit)

= $72,000 ÷ $3 - $1 = 36,000 bags

d. To determine the revenue for the mechanized process at the break-even quantity, apply the formula

Fixed Costs ÷ Contribution Margin

where Contribution Margin = Price of Product – Variable Costs

= $72,000 ÷ ($3 - $1) = 36,000 bags x $3= $108,000

e. For 65,000 bags sold using the manual method, the calculation is 65,000 bags x $3 - $1.60 = $91,000-$37,500 (manual process fixed cost)

= $53,000

f. Utilizing the mechanized method for 65,000 bags, the equation would be 65,000 bags x $3 - $1 = $130,000 - $72,000 (manual process fixed cost)

= $58,000

h. The mechanized process option should be picked as it leads to greater returns if demand goes beyond the point of indifference, while the manual process should be favored if demand remains beneath that point.

8 0

1 month ago