Boulevard Company expects to sell 500,000 units in 2021 at P100 per unit. Variable manufacturingcosts in producing the product amount to P40 per unit and fixed manufacturing costs amount toP25.00 per unit.A special order from Devil Company of 50,000 units were made at an offered price of P57.50 perunit. Regular sales from customers will not be affected from this transaction. However, in order tomeet the specifications and requirements bf Boulevard Company, overtime pay would be incurredamounting to P7.50 per unit.Determine the effect in income when the special order is accepted. Indicate whether increase ordecrease750,000875,0003.increase4. None of the above1. 500,000 increasedecrease1O 3O 42.

The Correct answer is Option 1. In the special order, Only variable cost will be considered as…

Answered: 750,000 2. decrease 875,000 3. increase…

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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Part 1: Net Present Value (NPV) First, we need to calculate the annual cash flow. The net income is given, and since depreciation is a non-cash expense, we add it back to net income to find the cash flow: Annual Cash Flow = Net Income + Depreciation Annual Cash Flow = $200,000+ $200,000 Annual Cash Flow = $400,000 The project lasts for 8 years with an initial investment of $2,000,000. The NPV formula is: CE NPV - Initial Investment = t=1 where CF, is the annual cash flow, is the discount rate, and 12 is the number of years. NPV= 400,000 - 2,000,000 t=1 (1+0.10) Calculating each term: Year 1: Year 2: Year 3: 400,000 (1+0.10)1 400,000 (1+0.10)² 400,000 (1+0.10) 400,000 1.10 400,000 363, 636.36 330, 578.51 1.21 400,000 = 300, 525.98 1.331
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Required: Calculate the amount of interest capitalized for 2024. E 10-24 Interest capitalization LO10-7 On January 1, 2024, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2025. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2024: $5,000,000, $3,000,000, Construction expenditures incurred during 2024 were as follows: January 1 March 31 June 30 12% bonds 8% long-term note September 30 December 31 $ 600,000 1,200,000 800,000 600,000 400,000 Required: Calculate the amount of interest capitalized for 2024 using the specific interest method. Page 554
Accounting Problem 10-10 (Algo) Interest capitalization; weighted-average method [LO10- 7] On January 1, 2021, the company obtained a $3 million loan with a 12% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 $ 1,230,000 March 1, 2021 720,000 June 30, 2021 380,000 October 1, 2021 670,000 January 31, 2022 990,000 April 30, 2022 1,305,000 August 31, 2022 2,340,000 On January 1, 2021, the company obtained a $3 million construction loan with a 12% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $5,600,000 and $7,600,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31. Required: 1. Calculate the amount of…
Problem 11-19 (Algo) Dropping or Retaining a Segment [LO11-2] Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided for seniors-home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow: aw Q A in Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) N 2 W *Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $44,600 to be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program. S F2 The depreciation in housekeeping is for a small van that is used to carry the housekeepers and their…
27. Problems with IRR [LO5] McKeekin Corp. has a project with the following cash flows: Year 0 1 2 Cash Flow $20,000 -26,000 13,000 What is the IRR of the project? What is happening here?
QUESTION 10 The following information is given to you: Gross Fixed Assets Net Fixed Assets Depreciation Expense Net Fixed Assets in 2022 was $ 600 800 400 200 Not enough information to answer. 2021 1,000 800 ??? 2022 1,000 ??? 200
why is it 800,000-740,000 and not 800,000-720,000
We are evaluating a project that costs $845,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 51,000 units per year. Price per unit is $53, variable cost per unit is $27, and fixed costs are $950,000 per year. The tax rate is 22 percent, and we require a return of 10 percent on this project. a. Calculate the accounting break-even point. What is the degree of operating leverage at the accounting break-even point? b. Calculate the base-case cash flow and NPV. What is the sensitivity of NPV to changes in the quantity sold? Explain what your answer tells you about a 500-unit decrease in the quantity sold. c. What is the sensitivity of OCF to changes in the variable cost figure? Explain what your answer tells you about a $1 decrease in estimated variable costs. Input area: C. Initial cost Project life Units sales Price/unit Variable cost/unit Fixed costs Tax rate Required return b.…

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750,000 2. decrease 875,000 3. increase 1. 500,000 increase 4. None of the above