Conny has found a new material to work with. It's a 17.9% price reduction of his original raw materials that cost $258.07. However, the new material is more delicate and he can not work as fast. This means He must work an extra 5 hours for one piece. Conny charges $20 per hour. How much will Conny be saving if he uses this new material?

Conny has found a new material to work with. It's a 17.9% price reduction of his original raw materials that cost $258.07. However, the new material is more delicate and he can not work as fast. This means He must work an extra 5 hours for one piece. Conny charges $20 per hour. How much will Conny be saving if he uses this new material?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Wendell’s Donut Shoppe is investigating the purchase of a new $42,800 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,700 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,500 dozen more donuts each year. The company realizes a contribution margin of $1.50 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? 2. What discount factor should be used to compute the new machine’s internal rate of return? (Round your answers to 3 decimal places.) 3. What is the new machine’s internal rate of return? (Round your final answer to nearest whole percentage.) 4. In addition to the…
Moka Golf Club produces golf balls and sells them to its members at a price of $ 7 each. The cost to produce 20,000 golf balls is as follows: Materials $ 10,000 Labour $ 24,000 Variable Overheads $ 20,000 Fixed Overheads $ 50,000 ---------------- $ 104,000 ----------------- The Club has received a request to supply 4,000 balls to a foreign entity at a price of $ 5.00 each. If Moka accepts the offer, its Fixed Overheads will increase by $ 5,000 because it will have to purchase additional equipment. Required: a) Prepare an incremental analysis for this Special Order and state whether to accept or reject…
Waterways has discovered that a small fitting it now manufactures at a unit cost of $1.00 could be bought elsewhere for $0.81 per unit. Waterways has unit fixed manufacturing costs of $0.20 that cannot be eliminated by buying this unit. Waterways needs 465,000 of these units each year.If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 400 of these units each year. The cost of the unit is $12.33. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,344, and the unit cost of producing the units would be $9.40. Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting. The company should (make or buy?) the fitting. Incremental cost / (savings) will be
Wendell’s Donut Shoppe is investigating the purchase of a new $40,000 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,200 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,000 dozen more donuts each year. The company realizes a contribution margin of $2.40 per dozen donuts sold. The new machine would have a six-year useful life. Required: 4. In addition to the data given previously, assume that the machine will have a $10,515 salvage value at the end of six years. Under these conditions, what is the internal rate of return? (Hint: You may find it helpful to use the net present value approach; find the discount rate that will cause the net present value to be closest to zero.) (Round your final answer to the nearest whole percentage.)
avi sells seashore paintings. His annual Fixed Costs are $1,000 and the Variable Costs are $8 per painting. If Xavi sells his paintings for $15, and sells 50 paintings per year more than his breakeven volume, what is his average cost per painting?
The owner of a small local flea market rents tables to vendors every Sunday. His only expense is the purchase of the building in which the flea market operates at a cost of $450,000. The owner expects to rent about 20 tables per week (1000 per year), and wishes to receive a 12% annual return on his investment in the building. What gross margin (in dollars) should the owner use?
Kylie's Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase her fixed costs by $59. What would happen if she purchased the new oven to realize the variable cost savings of $0.10 per cookie, and what would happen if she raised her price by just $0.20? She feels confident that such a small price increase will decrease the sales by only 20 units and may help her offset the increase in fixed costs. Given the following current prices how would the break-even in units and dollars change if she doesn't increase the selling price and if she does increase the selling price? Complete the monthly contribution margin income statement for each of these cases. Round your answers to two decimal places. Round break-even units to a whole number. Selling Price, Variable Cost and Fixed Cost Change Analysis Sales Price per Unit Variable Cost per Unit Contribution Margin per Unit Fixed Costs Break-even in Units Break-even in Dollars Unit Sales, Expected Sales…
“In my opinion, we ought to stop making our own drums and accept that outside supplier’s offer,” said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. “At a price of $20 per drum, we would be paying $5.45 less than it costs us to manufacture the drums in our own plant. Since we use 80,000 drums a year, that would be an annual cost savings of $436,000.” Antilles Refining’s current cost to manufacture one drum is given below (based on 80,000 drums per year): Direct materials $ 12.00 Direct labor 6.50 Variable overhead 1.50 Fixed overhead ($2.90 general company overhead, $1.80 depreciation, and $0.75 supervision) 5.45 Total cost per drum $ 25.45 A decision about whether to make or buy the drums is especially important at this time because the equipment being used to make the drums is completely worn out and must be replaced. The choices facing the company are: Alternative 1: Rent new equipment and continue to make the drums. The equipment would be…
Pedro sells port wine for $36 per bottle. His fixed costs are $1,430. Variable costs are $11 per bottle. Lori approaches Pedro about creating a special wine for her daughter's upcoming wedding. Lori will buy 50 bottles of Pedro's wine, but the order will have fixed costs for special labeling and delivery of $300. Pedro wants to go into the negotiations with Lori knowing the minimum price he can charge per bottle and not lose money on the order. What is that minimum price?