A Project Manager (PM) wants to price out the cost for her project for the use of a piece of equipment. The company knows the piece of equipment is used by all projects combined an average of 31 hours per week. The company the PM works for actually rents the piece of equipment from a 3rd party provider at a cost of $32000 per month and spends $19000 per year on maintenance (the 3rd party provider doesn't pay for it). What would be the ABC cost for the use of the piece of equipment for the PM's project if the PM needs the equipment for 50 hours? Use 5 significant figures in your calculations. Your Answer:

A Project Manager (PM) wants to price out the cost for her project for the use of a piece of equipment. The company knows the piece of equipment is used by all projects combined an average of 31 hours per week. The company the PM works for actually rents the piece of equipment from a 3rd party provider at a cost of $32000 per month and spends $19000 per year on maintenance (the 3rd party provider doesn't pay for it). What would be the ABC cost for the use of the piece of equipment for the PM's project if the PM needs the equipment for 50 hours? Use 5 significant figures in your calculations. Your Answer:

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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You are a manager at Northern Fibre, which is considering expanding its operations in synthetic fibre manufacturing. Your boss comes into your office, drops a consultant's report on your desk, and complains, "We owe these consultants $1.5 million for this report, and I am not sure their analysis makes sense. Before we spend the $15 million on new equipment needed for this project, look it over and give me your opinion." You open the report and find the following estimates (in millions of dollars): 1 2 19 10 Sales revenue 25.000 25.000 25.000 25.000 -Cost of goods sold 15.000 15.000 15.000 15.000 = Gross profit 10.000 10.000 10.000 10.000 - General, sales, and administrative expenses 1.200 1.200 1.200 1.200 - Depreciation 1.500 1.500 1.500 1.500 = Net operating income 7.3000 7.3000 7.3000 7.3000 - Income tax 2.555 2.555 2.555 2.555 b. If the cost of capital for this project is 14%, what is your estimate of the value of the new project? Value of project = $million (Round to three decimal…
Alter's Home Center (AHC) sells renovation and remodeling products to both contractors and individual home owners. One of the services AHC offers is delivery of the purchased products to the customer's work site. Because not all customers take advantage of the delivery service option, ACH adds 10 percent to the cost of the products purchased to cover the delivery cost. A business intern spent the summer at ACH. The intern's assignment was to analyze the delivery service and recommend a better way to charge customers for using it. The intern, who had studied activity-based costing, identified the following activities and the data related to them: Activity Cost Driver Annual Cost Annual Driver Volume Picking order Number of items $ 286,000 357,500 items Delivering order Number of orders 522,500 27,500 orders Handling complaints Number of complaints 32,400 135 complaints Total delivery cost $ 840,900 The intern selected two customers, who were frequent customers, to…
Ee 417.
You are a manager at Northern Fibre, which is considering expanding its operations in synthetic fibre manufacturing Your boss comes into your office, drops a consultant's report on your desk, and complains, "We owe these consultants $1.5 million for this report, and I am not sure their analysis makes sense. Before we spend the $16 million on new equipment needed for this project, look it over and give me your opinion." You open the report and find the following estimates (in millions of dollars): Sales revenue -Cost of goods sold Gross profit - General, sales, and administrative expenses -Depreciation Net operating income -Income tax 2 26.000 15.600 10.400 10.400 1.280 1.280 1,600 1.600 7.5200 7.5200 2.632 2.632 1 26.000 15.600 9 10 26.000 26.000 15.600 15.600 10.400 1.280 1.600 7.5200 2.632 10.400 1.280 1.600 7.5200 2.632 b. If the cost of capital for this project is 9%, what is your estimate of the value of the new project? Value of project = $ million (Round to three decimal…
1. Eddie is a production engineer for a major supplier of component parts for cars. He has determined that a robot can be installed on the production line to replace one employee. The employee earns $20 per hour and benefits worth $8 per hour for a total annual cost of $58,240 this year. Eddie estimates this cost will increase 6% each year. The robot will cost $16,500 to operate for the first year with costs increasing by $1500 each year. The firm uses an interest rate of 15% and a 10- year planning horizon. The robot costs $75,000 installed and will have a salvage value of $5000 after 10 years. Should Eddie recommend that purchase of the robot?
Mr. Buzz Lightyear is the project manager for a satellite project. He calculates that an in-house solution will cost the company $320,000 to create the top-secret software package and based on OPA information, another $10,000 per month to maintain the software. Ms. Hrt Thickl, the purchaser for the project advises Buzz that it would cost the project $233,000 to purchase the software. However the supplier requires a maintenance plan for each program installed which will cost the project $15,000 per month. Once the satellite is built the company plans on orbiting the satellite in a low orbit around Earth for 730 days. Question of Project Procurement