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BMAL530 Assignment: Homework 6 FALL 2014

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Question;1;award:1.68 out of;2.50 points;1.;award:1.68 out of;2.50 points;Woh Che Co. has four departments: materials;personnel, manufacturing, and packaging. In a recent month, the four;departments incurred three shared indirect expenses. The amounts of these;indirect expenses and the bases used to allocate them follow.;Indirect Expense;Cost;Allocation Base;Supervision;$;83,600;Number;of employees;Utilities;61,000;Square;feet occupied;Insurance;28,000;Value;of assets in use;Total;$;172,600;Departmental;data for the company?s recent reporting period follow.;Department;Employees;Square Feet;Asset Values;Materials;22;21,000;$;17,750;Personnel;11;5,250;2,130;Manufacturing;44;68,250;36,210;Packaging;33;10,500;14,910;Total;110;105,000;$;71,000;(1);Use;this information to allocate each of the three indirect expenses across the;four departments.;2;2.;award:0 out of;2.50 points;Marathon Running Shop has two service;departments (advertising and administration) and two operating departments;(shoes and clothing). During 2013, the departments had the following direct;expenses and occupied the following amount of floor space.;Department;Direct Expenses;Square Feet;Advertising;$;17,000;1,620;Administrative;18,600;1,980;Shoes;101,500;9,360;Clothing;12,000;5,040;The advertising department developed and;distributed 120 advertisements during the year. Of these, 90 promoted shoes;and 30 promoted clothing. The store sold $350,000 of merchandise during the;year. Of this amount, $273,000 is from the shoes department, and $77,000 is;from the clothing department. The utilities expense of $64,000 is an;indirect expense to all departments.;Complete the departmental expense allocation;spreadsheet for Marathon Running Shop. Assign (1) direct expenses to each;of the four departments, (2) the $64,000 of utilities expense to the four;departments on the basis of floor space occupied, (3) the advertising;department?s expenses to the two operating departments on the basis of the;number of ads placed that promoted a department?s products, and (4) the;administrative department?s expenses to the two operating departments based;on the amount of sales.;3.;award:0 out of;2.50 points;You;must prepare a return on investment analysis for the regional manager of Fast;Great Burgers. This growing chain is trying to decide which outlet of;two alternatives to open. The first location (A) requires a $500,000;investment and is expected to yield annual net income of $70,000. The second;location (B) requires a $200,000 investment and is expected to yield annual;net income of $44,000.;Compute;the return on investment for each Fast & Great Burgers alternative.;4.;award:0 out of;2.50 points;Heart;Home Properties is developing a subdivision that includes 450 home;lots. The 200 lots in the Canyon section are below a ridge and do not have;views of the neighboring canyons and hills, the 250 lots in the Hilltop;section offer unobstructed views. The expected selling price for each Canyon;lot is $51,000 and for each Hilltop lot is $98,000. The developer acquired;the land for $2,500,000 and spent another $2,200,000 on street and utilities;improvements.;Assign;the joint land and improvement costs to the lots using the value basis of;allocation and determine the average cost per lot. (Do not round your intermediate calculations.).;award:0 out of;2.50 points;Beyer;Company is considering the purchase of an asset for $280,000. It is expected;to produce the following net cash flows. The cash flows occur evenly;throughout each year.;Year 1;Year 2;Year 3;Year 4;Year 5;Total;Net;cash flows;$;68,000;$;40,000;$;74,000;$;140,000;$;21,000;$;343,000;Compute;the payback period for this investment. (Cumulative;net cash outflows must be entered with a minus sign. Round your answers to 2;decimal places.);6.;award:0 out of;2.50 points;Compute;the payback period for each of these two separate investments;a.;A new;operating system for an existing machine is expected to cost $260,000 and;have a useful life of five years. The system yields an incremental after-tax;income of $75,000 each year after deducting its straight-line depreciation.;The predicted salvage value of the system is $10,000.;b.;A;machine costs $180,000, has a $14,000 salvage value, is expected to last ten;years, and will generate an after-tax income of $41,000 per year after;straight-line depreciation..;award:0 out of;2.50 points;B2B Co.;is considering the purchase of equipment that would allow the company to add;a new product to its line. The equipment is expected to cost $380,800 with a;6-year life and no salvage value. It will be depreciated on a straight-line;basis. B2B Co. concludes that it must earn at least a 9% return on this;investment. The company expects to sell 152,320 units of the equipment?s;product each year. The expected annual income related to this equipment;follows. (PV of $1, FV of $1, PVA of $1;and FVA of $1) (Use appropriate factor(s) from the tables provided.);Sales;$;238,000;Costs;Materials;labor, and overhead (except depreciation);83,000;Depreciation;on new equipment;63,467;Selling;and administrative expenses;23,800;Total;costs and expenses;170,267;Pretax;income;67,733;Income;taxes (30%);20,320;Net;income;$;47,413;Compute;the net present value of this investment. (Round;PV Factor" to 4 decimal plac;8.;award:0 out of;2.50 points;Farrow;Co. expects to sell 200,000 units of its product in the next period with the;following results.;Sales;(200,000 units);$;3,000,000;Costs;and expenses;Direct;materials;400,000;Direct;labor;800,000;Overhead;200,000;Selling;expenses;300,000;Administrative;expenses;514,000;Total;costs and expenses;2,214,000;Net;income;$;786,000;The;company has an opportunity to sell 20,000 additional units at $13 per unit.;The additional sales would not affect its current expected sales. Direct;materials and labor costs per unit would be the same for the additional units;as they are for the regular units. However, the additional volume would;create the following incremental costs: (1) total overhead would increase by;16% and (2) administrative expenses would increase by $86,000.;Calculate;the combined total net income if the company accepts the offer to sell;additional units at the reduced price of $13 per unit.

 

Paper#38109 | Written in 18-Jul-2015

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