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Question;1. Uncertain Future Cash Flows;Union Bay Plastics is investigating the purchase of automated;equipment that would save $100,000 each year in direct labor and inventory carrying;costs. This equipment costs $750,000 and is expected to have a 10-year;useful lift with no salvage value. The company?s required rate of;return is 15% on all equipment purchases. This equipment would provide;intangible benefits such as greater flexibility and higher-quality output;that are difficult to estimate and yet are quite significant.;Required;(Ignore income taxes);What dollar value per year would the intangible benefits have to;have in order to make the equipment an acceptable investment?;2. Production Budget;Chrystal Telecom has budgeted the sales of its innovative mobile;phone over the next four months as follows;Sales in Units;July???????????????????????????30,000;August?????????????????????????.45,000;September??????????????????????..60,000;October????????????????????????.50,000;The company is now in the process of preparing a production;budget for the third quarter. Past experience has shown that;end-of-month finished goods inventories must equal 10% of the next month?s;sales. The inventory at the end of Jun was 3,000 units.;Required;Prepare a production budget for the third quarter showing the;number of units to be produced each month and for the quarter in total.;3. Manufacturing Overhead;Budget;The direct labor budget of Krispin Corporation for the upcoming;fiscal year includes the following budgeted direct labor-hours.;1st;quarter 2nd quarter 3rd;quarter 4th quarter;Budgeted direct;labor-hours???.;5,000;4,800;5,200 5,400;The company?s variable manufacturing overhead rate is $1.75 per;direct labor-hour and the company?s fixed manufacturing overhead is $35,000;per quarter. The only noncash item included in fixed manufacturing overhead;is depreciation, which is $15,000 per quarter.;Required;1.;Construct the;company?s manufacturing overhead budget for the upcoming fiscal year.;2. Compute the company?s manufacturing overhead;rate (including both variable and fixed manufacturing overhead) for the;upcoming fiscal year. Round off to the nearest whole cent.;4. Residual Income;Midlands Design Ltd. Of Manchester, England, is a company;specializing in providing design services to residential developers.;Last year the company had net operating income of ?400,000 on sales of;?2,000,000. The company?s average operating assets for the year were;?2,200,000 and its minimum required rate of return was 16%. (The;currency in the United Kingdom is the pound, denoted by ?);Required:Compute;the company?s residual income for the year.;1.

 

Paper#45579 | Written in 18-Jul-2015

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