14. A short-term project requires 10,000 hours of unskilled labour and5,000 hours of skilled labour. Both are currently fully utilised.The unskilled workers are paid £10 per hour and would work up to15,000 more hours of overtime at an overtime rate of £15 per hour.Alternatively, additional labour could be recruited at £18 per hour.The skilled workers are paid £30 per hour. They will not workovertime, and no suitable new workers can be recruited. Sufficienthours could be obtained by transferring them from other work whichhas a contribution of £10 per hour (after accounting for labour costs).What is the relevant cost of labour for the proposed project?(a) £425,000(b) £350,000(c) £275,000(d) £200,000

concept. For decision making , only relevant cost are useful. Irrelevant cost and sunk cost are not…

Answered: 14. A short-term project requires…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Aa4
A factory engaged in manufacturing plastic toys is working at 50% capacity and produces 50,000 toys per month. The present cost break up for one toy is as below. Material : RM80 Labour RM25 Overheads RM50 [60% fixed] : The selling price is RM250 per toy. If it is decided to work the factory at 60% capacity, the selling price falls by 8%. At 80% capacity, the selling price falls by 10% accompanied by a similar fall in the price of material. Required: Prepare a statement showing the profits/losses at 50%, 70% and 80% capacity utilizations.
7. Canary Ltd. owns a yacht that is in need of repair and which was purchased for £6,800. The company is working to full capacity but is considering refurbishing the yacht for resale. Workers who are paid £20 per hour will carry out the refurbishment and it is estimated that 200 hours work is required. The normal labour charge for customers is £20 per hour. The company believes that the yacht could be sold for £6,200 in its current condition. Materials costing £1,000 would be required to carry out the refurbishment. Calculate the minimum resale price that the business would have to charge to justify the refurbishment of the yacht: A. £15,200 В. £11,200 С. £10,200 D. £6,200
A rotational molding operation has fixed costs of $10,000 per year and variable costs of $52 per unit. If the process is automated via conveyor, its fixed cost will be $43,000 per year, but its variable cost will be only $10 per unit. Determine the number of units each year necessary for the two operations to break even. The number of units each year necessary for the two operations to break even, (in units) Round to the nearest two (2) decimal places
Excaster University is considering launching a new 12 month taught Masters programme in Data Analytics. In order to offer the programme the University will incur the following fixed costs: a) One full time administrator at an annual cost of £40,000 b) Advertising and promotional costs of £25,000 per year c) Subscriptions to data providers £50,000 per year d) Licenses for analytical software £35,000 per year e) In addition the course will incur an overhead charge for use of shared resources of £45,000 per year. Teaching on the course will be delivered at an estimated cost of £500,000 per year. The variable costs associated with delivering an excellent student experience are estimated at £2000 per student. Bathchester University (about 60 miles away) offers a competitive course priced at £13,000 which attracts 60 students. Plymhampton University (about 30 miles away) also offers a competitive course and charges £9,000 and has recruited 40 students for the most recent intake. Excaster are…
Nestle Ltd. produces its premium plant food in 50 Kg bags. Demand is 100,000 Kgs. per week and the plant operates 52 weeks each year. Nestle can produce 250,000 Kgs. per week. The setup cost is OMR 200 and the annua holding cost rate is OMR 0.30 per bag. What is the optimal total cycle time including the production time in year? a. 0.146 O b. None is correct O c. 0.208 d. 0.127 e. 0.137 O f. 0.108
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $5.17 million per year. Your upfront setup costs to be ready to produce the part would be $7.81 million. Your discount rate for this contract is 8.4%. a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in the value of your firm?
A Production line produces $80K a month but 20% of the production is waste. If they invest $40K to bring the waste down to 10% how many months until the investment pays back?
At present the selling price of the product is £5.75 and it incurs the following variable costs: The fixed costs of production are £180,000 and the company currently sells 90,000 units. Direct Labour £1.35 Direct Materials £1.75 Other Direct costs £0.40 Discuss the limitations of break-even analysis.
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $4.93 million per year. Your upfront setup costs to be ready to produce the part would be $7.95 million. Your discount rate for this contract is 7.9%. a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in the value of your firm? a. What does the NPV rule say you should do? The NPV of the project is $ million. (Round to two decimal places.)
Brecht Ltd produces a standard product which is sold for £85 each. The business incurred variable costs of £550,000 last year and total costs were £850,000. The business sold 11,000 units during the year and was operating at full capacity. The business intends to expand its output. This will involve building a factory extension, which will increase annual fixed costs by £120,000 per year. 1. Calculate the number of products that need to be sold in order for the business to break even, after the new factory extension has been built. 2. Calculate the profit (loss) that would be generated if the business sold 10,000 units (i) before the factory extension is built. (ii) after the factory extension is built.
A department makes a product whose contribution per unit is £1,000, and which takes 20 hours machine time. A component used in this product with a marginal cost of £300 (taking 5 hours of machine time) could be purchased from an external Supplier. The department is working at full capacity. What is the maximum price that the company may pay to buy the component from an external supplier?£575£550£500£600

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