16. Smirnoff Corp. invested P31,250,000 in a cabinet-making business. It expects to earn a 25% return on its investment in equipment used in the manufacturing the cabinets. Its consultants estimate that 10,000 units of cabinets next year. Estimated costs per unit of cabinet at this level follows: Variable manufacturing costs = P1,562.50; Fixed selling and administrative costs = P625.0O; Fixed manufacturing costs = P312.50. To accomplish the company objective, one cabinet should be priced at:

16. Smirnoff Corp. invested P31,250,000 in a cabinet-making business. It expects to earn a 25% return on its investment in equipment used in the manufacturing the cabinets. Its consultants estimate that 10,000 units of cabinets next year. Estimated costs per unit of cabinet at this level follows: Variable manufacturing costs = P1,562.50; Fixed selling and administrative costs = P625.0O; Fixed manufacturing costs = P312.50. To accomplish the company objective, one cabinet should be priced at:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following data refer to the Daniels division of Tippett Inc. Daniels sells variable- speed drills. The standard drill sells for $ 40, and Daniels plans to sell 30,000 units in 2017. Tippett treats Daniels as an investment center with a total attributable investment of $ 800,000. Daniels' annual fixed costs are $ 200,000. Variable cost per standard drill is $ 24. The firm's required rate of return on investment is 15%. 1.1 What is the expected Return on Investment in 2017? 1.2 What is the expected residual income for Daniels in 2017? A special order from a unit of the US Government has been received to buy from Daniel 10,000 units every year of the device at the price of $30 each. If the order is accepted, Daniels will have to incur additional annual fixed costs of $30,000 for administration and $150,000 to modify and expand the manufacturing facilities. 1.3 Based on the effect on ROI and/or Residual Income for the first year , will the manager accept this order? Why and why not?
A4
A food processing plant has fixed charges, overhead, and general expenses equal to $3,000,000 and they are independent of production rate. The variable cost of the plant equals to 40% of the total annual sales. Currently the plant operates at 75% capacity and has total annual sales of $8,000,000. The selling price is 10 S/kg, and the income tax is 30%. Calculate: a) the production rate at breakeven point; b) net profit at full capacity
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91. Subject :- Accounting
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