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Olam International Limited sources and processes agricultural products including edible nuts and spices. Assume the company recently acquired a peanut-processing company that has a normal annual capacity of 180,000 bushels and that sold 125,000 bushels last year at a price of $35 per bushel. The purpose of the acquisition is to furnish peanuts for a new peanut butter plant, which needs 75,000 bushels of peanuts per year. It has been purchasing peanuts from suppliers at the market price. Production costs per bushel of the peanut-processing company are as follows: Direct materials Direct labor Variable overhead $9 4 2 Fixed overhead at normal capacity Total 10 $25 Management is trying to decide what transfer price to use for sales from the newly acquired Peanut Division to the Peanut Butter Division. The manager of the Peanut Division argues that $35, the market price, is appropriate. The manager of the Peanut Butter Division argues that the cost price of $25 (or perhaps even less)…

Whole Foods, the world's leader in natural and organic foods, has more than 310 stores and 62,000 employees in North America and the United Kingdom. A new store is being built in San Antonio, Texas, at the Vineyard shopping center. A commercial oven for $9,618 with a 6-year life and residual value of $1,260 was purchased for the store. What is the depreciation expense in year 2 for the oven? Use the straight-line method. Depreciation expense $

Cari Heat (CH) Ltd. is currently faced with a critical decision regarding its productionequipment. Cari Heat (CH) is evaluating two options for its production equipment:upgrading or replacing. The company manufactures and sells 7,500 heaters every year, eachpriced at $920. The current production equipment, which was acquired at a cost of$2,150,000, has been in use for just two years and is subject to straight-line depreciation overa five-year useful life. Furthermore, it possesses no terminal disposal value, but it can becurrently sold for $650,000.The following table presents data for the two alternatives:A B C1 Choice Upgrade Replace2 One-time equipment costs $3,500,000 $5,200,0003 Variable manufacturing cost per Heater $180 $904 Remaining useful life of equipment (years) 3 35 Terminal disposal value of equipmentRequired0 01. Prepare a schedule, for the remaining 3 years, reflecting whether CH should upgrade itsproduction line or replace it? 2. Assuming that all other data are as…

In 2012, the Campbell Soup Company acquired Bolthouse Farms for $1.55 billion. This acquisition increased the level of vertical integration in Campbell, as Bolthouse Farms owned and operated extensive farming operations where it produced many food items used in Campbell's products. Suppose that the value of produce provided by these farms after the acquisition would be $95 million per year for Campbell and that, in addition, Campbell could save $10 million per year in costs it would otherwise spend in searching for and negotiating over equivalent produce. However, the transaction cost of the acquisition (lawyers' fees, re-locating some production facilities, paying severance to unnecessary employees, etc.) required a one-time payment of $50 million. Assume that Campbell receives the produce related benefits in perpetuity. If the interest rate used to discount future earnings is 5%, what is the present value of net benefits to Campbell? The present value (PV) of net benefits to Campbell…

Kenora Limited is a manufacturer of baby food. In 2015, the company acquired a pet foodmanufacturing division at a cost of $500,000. As of December 31, 2021 (the fiscal year-end of KenoraLimited), the pet food division has a fair value of $600,000 and value-in-use of $650,000. It is estimatedthat the costs to sell the pet food division would be $25,500. Kenora Limited has determined that thepet food division is a cash generating unit per IFRS.The breakdown of the pet food division’s carrying amount of net assets is as follows on December 31,2021:Cash: $20,000Accounts Receivable: $55,000Inventory: $200,000Machinery (Net): $400,000Goodwill: $150,000Accounts Payable: $60,000Notes Payable: $75,000Required(a) Under ASPE, is goodwill impaired? If so, provided the necessary journal entries in goodform. (b) Under IFRS, is goodwill impaired? If so, provided the necessary journal entries in goodform.

Sugar Sweet (SS) Company produces and sells 7,000 specialty Treats per year at a selling price of $850 each. Its current production equipment, purchased for $1,850,000 and with a five-year useful life, is only two years old. It has a terminal disposal value of $0 and is depreciated on a straight-line basis. The equipment has a current disposal price of $500,000. However, the emergence of a new technology has led SS to consider either upgrading or replacing the production equipment. The following table presents data for the two alternatives:                                   A                                                    B                                                            C 1 Choice                                                                Upgrade                                                 Replace  2 One-time equipment costs                         $3,000,000                                             $4,800,000 3 Variable manufacturing cost per Treat…

The TechHelp Company produces and sells 7,500 modular computer desks per year at a selling price of $ 600 each. Its current production​ equipment, purchased for$ 1, 500 ,000 and with a​ 5-year useful​ life, is only 2 years old. It has a terminal disposal value of​ $0 and is depreciated on a​ straight-line basis. The equipment has a current disposal price of$ 550, 000. However, the emergence of a new molding technology has led TechHelp to consider either upgrading or replacing the production equipment. The following table presents data for the two​ alternatives:

Mountain Gear has been using the same machines to make its name-brand clothing for the last five years. A cost efficiency consultant has suggested that production costs may be reduced by purchasing more technologically advanced machinery. The old machines cost the company 5390,000. The old machines presently have a book value of $139,000 and a market value of $31,000. They are expected to have five year remaining life and zero salvage value. The new machines would cost the company $290,000 and have operating expenses of $19,000 a year. The new machines are expected to have a five-year useful life and no salvage value. The operating expenses associated with the old machines are $49,000 a year. The new machines are expected to increase quality, justifying a price increase and thereby increasing sales revenue by $29,000 a year. Select the true statement. Multiple Choice The company will be $31,000 better off over the 5 year period if it replaces the old equipment The company will be…

Bramble Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $88,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $12,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 11,000 frames per year, generating a total contribution margin of $85,500.   Martson Molders currently sells a molding machine that will allow Bramble Pix to increase production and sales to 15,000 frames per year. The machine, which has a ten-year life, sells for $131,000 and would cost $12,000 per year to operate. Bramble Pix's current machine costs only $8,000 per year to operate. If Bramble Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $19,500 at the end of its ten-year life.…

Briquette Corporation has in stock 35,800 kilograms of material L that it bought five years ago for $5.55 per kilogram. This raw material was purchased to use in a product line that has been discontinued. Material L can be sold as is for scrap for $1.67 per kilogram. An alternative would be to use material L in one of the company's current products, Q08C, which currently requires 2 kilograms of a raw material that is available for $9.15 per kilogram. Material L can be modified at a cost of $0.78 per kilogram so that it can be used as a substitute for this material in the production of product Q08C. However, after modification, 4 kilograms of material L is required for every unit of product Q08C that is produced. Briquette Corporation has now received a request from a company that could use material L in its production process. Assuming that Briquette Corporation could use all of its stock of material L to make product Q08C or the company could sell all of its stock of the material at…

Briquette Corporation has in stock 35,800 kilograms of material L that it bought five years ago for $5.55 per kilogram. This raw material was purchased to use in a product line that has been discontinued. Material L can be sold as is for scrap for $1.67 per kilogram. An alternative would be to use material L in one of the company's current products, Q08C, which currently requires 2 kilograms of a raw material that is available for $9.15 per kilogram. Material L can be modified at a cost of $0.78 per kilogram so that it can be used as a substitute for this material in the production of product Q08C. However, after modification, 4 kilograms of material L is required for every unit of product Q08C that is produced. Briquette Corporation has now received a request from a company that could use material L in its production process. Assuming that Briquette Corporation could use all of its stock of material L to make product Q08C or the company could sell all of its stock of the material at…

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 $384,000 with a 10-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 153,600 units of the equipment’s product each year. The expected annual income related to this equipment follows.          Sales $ 240,000   Costs       Materials, labor, and overhead (except depreciation on new equipment)   84,000   Depreciation on new equipment   38,400   Selling and administrative expenses   24,000   Total costs and expenses   146,400   Pretax income   93,600   Income taxes (40%)   37,440   Net income $ 56,160      If at least an 9% return on this investment must be earned, compute the net present value of this investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

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 $382,400 with a 8-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 152,960 units of the equipment's product each year. The expected annual income related to this equipment follows. Sales 239,000 Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses 84,000 47,800 23,900 155,700 Pretax income 83,300 24,990 Income taxes (30%) Net income 58,310 If at least an 8% return on this investment must be earned, compute the net present value of this investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Chart Values are Based on: n = PV Factor Select Chart Amount Present Value X 106,110 Present Value of an Annuity of 1 0 Present…

Two years ago, Toshiba Electronics made a $15 million investment in newassembly line machinery. It purchased approximately 200 units at $70,000 each and placed them in plants in 10 different countries. The equipment sorts, tests, and performs insertion-order kitting on electronic components in preparation for special-purpose printed circuit boards. A new international industry standard requires a $16,000 additional cost next year (year 1 of retention) on each unit in addition to the expected operating cost. Due to the new standards, coupled with rapidly changing technology, a new system is challenging these 2-year-old machines. The chief engineer at Toshiba USA has asked that a replacement study be performed this year and each year in the future, if need be. At i = 10% and with the estimates below, do the following:a. Determine the AW values and economic service lives necessary to perform the replacement study. Challenger: First cost: $50,000 Future market values: decreasing by 20% per…

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 10-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 152,320 units of the equipment's product each year. The expected annual income related to this equipment follows. Sales $ 238,000 Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses 83,000 38,080 23,800 144,880 93,120 37,248 Pretax income Income taxes (40%) Net income $ 55,872 If at least an 9% return on this investment must be earned, compute the net present value of this investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Chart Values are Based on: n = 10 i = 9|% Select Chart Amount PV Factor Present Value Present Value of an Annuity of 1…

Whispering Winds Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $ 108,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $ 8,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $ 102,000. Martson Molders currently sells a molding machine that will allow Whispering Winds Pix to increase production and sales to 20,000 frames per year. The machine, which has a ten-year life, sells for $ 143,000 and would cost $ 15,000 per year to operate. Whispering Winds Pix's current machine costs only $ 8,000 per year to operate. If Whispering Winds Pix purchases the new machine, the old machine could be sold at its book value of $ 5,000. The new machine is expected to have a salvage value of $…

Whispering Winds Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $108,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $8,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $102,000.Martson Molders currently sells a molding machine that will allow Whispering Winds Pix to increase production and sales to 20,000frames per year. The machine, which has a ten-year life, sells for $143,000 and would cost $15,000 per year to operate. Whispering Winds Pix’s current machine costs only $8,000 per year to operate. If Whispering Winds Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $20,000 at…

Tony Hawk (TH) Ltd. is currently faced with a critical decision regarding its production equipment. Tony Hawk (TH) is evaluating two options for its production equipment: upgrading or replacing. The company manufactures and sells 7,500 heaters every year, each priced at $920. The current production equipment, which was acquired at a cost of $2,150,000, has been in use for just two years and is subject to straight-line depreciation over a five-year useful life. Furthermore, it possesses no terminal disposal value, but it can be currently sold for $650,000. The following table presents data for the two alternatives:   A B C Choice: Upgrade  Replace One-time equipment costs: $3,500,000 $5,200,000 Variable manufacturing cost per Heater $180 $90 Remaining useful life of equipment (years) 3 3 Terminal disposal value of equipment 0 0 Required: 3. Assume that the capital expenditures to replace and upgrade the production equipment are as given in the original exercise, but that…