When June and Jerry started their business, Kingbird Inc., their mission was simple: to provide a quiet, round-trip ride to hundreds ofoffice workers so they could work during the commute. At the beginning, they had enough capacity to accommodate all interestedcustomers. But as this idea gained popularity, there was demand they couldn't meet-and not just by commuters, but also by travelersheading to and from the airport.June and Jerry organized their growing business into geographical segments, evaluating each on its operating income and profitmargin. The two owners retained control of asset purchases. June and Jerry still intended for their segment managers to worktogether, helping each other with capacity needs when required. Such participation was left up to the segment managers, though. Allthree segments had the same variable and absorption cost for an average two-way trip, at $16 and $24 per customer, respectively.Since the culture in this company was very open, each manager was aware of the other segments' similar cost structures.The Airport segment's drivers were already prebooked for the upcoming holiday weekend, and there was a steady stream of callscoming in with more requests for this service. Naturally, the Airport segment manager called on both the Hawthorn and Boltonsegments to ask for help. Hawthorn had some capacity, but Bolton was prebooked with its own repeat customers.Listed below are the average rates to provide two-way transportation services to one person or two people (rate was the same) ineach geographic area.Average market price(a)Transfer priceHawthorn Bolton Airport$57$80If you managed the Hawthorn segment and had some available capacity, how much would you want to charge the Airportsegment for taking on this additional work?$$55per trip

Transfer price:Transfer price is a price where a company sells its goods or services within the…

Answered: If you managed the Hawthorn segment and…

If you managed the Hawthorn segment and had some available capacity, how much would you want to charge the Airport segment for taking on this additional work? Transfer price $ per trip

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

You are considering a new project that will result in additional sales of an existing project should these results be included?
Any suggestions? Thanks for the help! Given the data for three different alternatives in the table below, determine the best alternative using the incremental rate of return (∆RoR) analysis. MARR =9%. A B C First cost $15,000 $25,000 $20,000 O &M Cost/ year 1,600 400 900 Benefit/year 8,000 13,000 9,000 Salvage value 3,000 6,000 4,600 Life in years 4 4 4 1. The better alternative between the first increment is ________________. 2. The better alternative between the second increment is ___________________.
Acadia Logistics anticipates that it will need more distribu-tion center space to accommodate what it believes will bea significant increase in demand for its final-mile services.Acadia could either lease public warehouse space to coverall levels of demand or construct its own distribution centerto meet a specified level of demand, and then use publicwarehousing to cover the rest. The yearly cost of buildingand operating its own facility, including the amortized costof construction, is $12.00 per square foot. The yearly cost ofleasing public warehouse space is $20.00 per square foot. Theexpected demand requirements follow: a. Calculate the expected value of leasing public warehousespace as required by demand.b. Calculate the expected value of building a 200,000-square-foot distribution center and leasing public warehousespace as required if demand exceeds the need for 200,000square feet of space.c. Calculate the expected value of building a 300,000-square-foot distribution center and…
2) Using benefit-cost ratio analysis, determine which one of the three mutually exclusive alternatives should be selected. Each alternative has a six-year useful life. Assume a 10% MARR. a. Convert cost and salvage to an equivalent series. (Hint: use both to calculate EUAC) b. Determine B/C for each device C. Perform incremental B/C ratio analysis for: i. Device A- Device B ii. Device B-Device C Device A Device B Device C $ 560 $ 140 $ 40 First Cost $ 340 $ 100 $ 0 $ 120 $ 40 Uniform Annual Benefit Salvage Value
Which assets depreciate?
If you were analyzing a replacement project and suddenly learnedthat the old equipment could be sold for $1,000 rather than $400,would this new information make the replacement look better orworse? Explain.
1.
H
You are considering relocating your outdoor-equipment manufacturing plant and have narrowed your choices to four possible locations based on the availability of high quality labor, rail transportation, and an adequate distribution network. Based on the following costs and benefits associated with each location, use incremental analysis and IRR to choose the most cost-effective location assuming MARR = 15%. Initial cost (Year 0) Annual operations and maintenance costs (Years 1 thru 5) Annual gross benefits (Years 1 thru 5) Upload Choose a File Question 6 Portland, OR Bend, OR Boise, ID $700,000 $800,000 $600,000 500,000 800,000 Seattle, WA $1,000,000 1,000,000 400,000 1,100,000 You consider purchasing a new piece of equipment (7yr MACRS property) f 1,375,000 625,000 1,500,000 sod POLE 1-10 1
REQUIRED Use the information provided below to answer the following questions: 3.1. Calculate the Payback period for the HMC. 3.2. Calculate the Net Present Value for both the HMC and VMC. 3.3. Calculate the Internal Rate of Return (IRR) for the HMC and VMC. 3.4. Which configuration of the CNC machining centres should SMT purchase, if any? Motivate your answer by referring to the answers obtained in questions 3.3 and 3.4. INFORMATION Southern Manufacturing Tools Limited (SMT) is considering the purchase of a Computer Numerical Control (CNC) machining centre for its operations. Two configurations of the CNC machining centres are available: horizontal CNC machining centre (HMC) and vertical CNC machining centre (VMC). Both the HMC and VMC will require an initial investment of R10 000 000, will have a useful life of 7 years and a residual value of R1 500 000. SMT uses the straight-line method of depreciation. The expected net cash inflows of the VMC are expected to be R2 100 000…
Please do not give solution in image format thanku
Can someone set up an excel sheet using the following data and show me the formula side, so I know how to replicate this type of problem later on? I don't understand where we get the values from the solution excel sheet I attached in the images. Thanks in advance!