In 2017, Cole & Sons, a small environmental-testing firm, performed 12,200 radon tests for $300 each and 16,000 lead tests for $230 each. Because newer homes are being built with lead-free pipes, lead-testing volume is expected to decrease by 12% nextyear. However, awareness of radon-related health hazards is expected to result in a 5% increase in radon-test volume each year in the near future. Jim Cole feels that if he lowers his price for lead testing to $210 per test, he will have to face only a 4% declinein lead-test sales in 2018.Read the requirementsRequirement 1. Prepare the sales budget for Cole & Sons assuming that prices are held at 2017 levels.Sales BudgetFor the Year Ended December 31, 2018RequirementsSelling priceUnits sold in 2018Total revenuesRadon tests30012810384300023032384001. Prepare a 2018 sales budget for Cole & Sons assuming that Cole holds pricesat 2017 levels.Lead tests1408070804002. Prepare a 2018 sales budget for Cole & Sons assuming that Cole lowers theprice of a lead test to $210. Should Cole lower the price of a lead test in 2018 ifthe company's goal is to maximize sales revenue?TotalPrintDone

Sales budget is very important budget which shows expected sales revenue to be earned. Estimated…

Answered: In 2017, Cole & Sons, a small…

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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In 2017, Cole & Sons, a small environmental-testing firm, performed 11,200 radon tests for $290 each and 15,800 lead tests for $240 each. Because newer homes are being built with lead-free pipes, lead-testing volume is expected to decrease by 12% next year. However, awareness of radon-related health hazards is expected to result in a 4% increase in radon-test volume each year in the near future. Jim Cole feels that if he lowers his price for lead testing to $230 per test, he will have to face only an 7% decline in lead-test sales in 2018. Requirements 1. Prepare a 2018 sales budget for Cole & Sons assuming that Cole holds prices at 2017 levels. 2. Prepare a 2018 sales budget for Cole & Sons assuming that Cole lowers the price of a lead test to $230. Should Cole lower the price of a lead test in 2018 if the company's goal is to maximize sales revenue?
Economics Suppose a firm is investing in a pollution control technology to meet a regulation in three years that can reduce its emissions for any given level of output. The technology costs $40,000 to install now, but will cost only $10,000 three years later due to expected innovations. If the firm does not comply, it will have to pay fines with the amount of $5000 in the next year, $10,000 in two years, and $15,000 in three years. With an interest rate of 3%, should the firm install this technology now or later?
An engineer proposes to spend $95,000 on a capital project to upgrade a package delivery system. The project is expected to have labor savings of $20,000 a year plus reduce scrap costs by $5000 a year. There is expected to be no salvage value at the end of the equipment life, which is anticipated to be 7 years. MARR is 12%. This question is in five parts. The engineer next performs a sensitivity analysis for a best case and worst case scenario: Best Case Worst Case Initial Cost $95,000 $110,000 Labor Savings $25,000 $15,000 Scrap Cost Reduction $6,000 $4,00O Part 4: What is the present worth (PW) in the worst case scenario? (your answer should be a positive or negative number and do not use commas or $ signs)
In 2016, the city of Abu Dhabi collected $24 million in fines from motorists because of traffic violations caught by red-light cameras. The cost of operating the system was $14.5 million. The net profit, that is, profit after operating costs, is split equally (that is, 50% each) between the city and the operator of the camera system. What will be the rate of return over a 3-year period to the contractor that paid for, installed, and operates the system, if its initial cost was $10 million and the profit for each of the 3 years is the same as it was in 2016? Should the company invest in this project at MARR of 15% per year?
A factory has a flooding probability of 1% per year. When flooded, the factory will suffer 500,000 EUR in material damages. The existing insurance will certainly cover the material damages, a deductible of 20% will however apply. When flooded the factory will suffer another 500,000 EUR in opportunity cost of lost production time, which are not covered by insurance. A local plumbing firm has made an offer of installing a pump that would avoid this flooding and costs 5,000 EUR per year. Your boss asks you if this is a good idea? (assuming no recovery rate). a) Calculate Expected Loss p.a
An officer for a large construction company is feeling nervous. The anxiety is caused by a new excavator just released onto the market. The new excavator makes the one purchased by the company a year ago obsolete. As a result, the market value for the company’s excavator has dropped significantly, from $600,000 a year ago to $50,000 now. In ten years, it would be worth only $3,000. The new excavator costs only $950,000 and would increase operating revenues by $90,000 annually. The new equipment has a ten-year life and expected salvage value of $175,000. The tax rate is 35%, the CCA rate, 25% for both excavators, and the required rate of return for the company is 14%. What is the NPV of the new excavator?
A growing city of 60,000 has an intersection near the south end of the main business district. The north-south street has no traffic control at that intersection, and the east-west intersecting street has only stop signs.There have been a few accidents in recent years and it has been estimated that a traffic light can provide benefits of $55,000 per year in reduced property loss and disabling injuries, increasing by $2,500 per year.The disbenefits of the traffic light include cost of fuel and time delays, amounting to an estimated $24,000 per year, increasing by $2,000 per year. The installation cost of the traffic light is estimated to be $120,000 with maintenance and electricity running $6,000 in the first year and increasing by $300 per year over a time horizon of 10 years. It is anticipated that the intersection will need to be redesigned at that time and the traffic light removed and sold to a nearby small community for a net salvage value of $4,000. The discount rate is 7%. Is…
Two firms, A and B, each currently dump 50 tonnes of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each tonne of pollution dumped into the river. The government will sell 40 pollution permits for $75 each. It costs Firm A $100 for each tonne of pollution that it eliminates before it reaches the river, and it costs Firm B $50 for each tonne of pollution that it eliminates before it reaches the river. Between the cost of permits and the cost of eliminating pollution, the likely outcome is Firm A spends and Firm B spends cross out $4000; $3500 cross out O b. $3000; $2500 cross out O c. $3000; $3500 cross out O d. $4000; $2500 cross out O e. $5000; $2500 cross out O f. $5000; $3500
SKE Corporation manufactures large kitchen appliances. The following represents financial information for two years: Mr. Cheung is also reviewing the quality of various production process. Recently several competitors have introduced similar prototype chips with much higher quality and causing SKE's sales to decline. Mr. Cheung has embarked an intensive campaign to strengthen its quality control at the beginning of 2023. The costs relating to quality control were complied for 2021 and the full year of 2022. The related costs are shown below 2021 2022 Process Inspection 60,000 52,800 Scrap 60,200 57,600 Quality Training 440,000 610,000 Warranty repairs 150,000 140,000 Testing equipment 230,000 230,000 Resolving customer complaints 108,400 89,000 Rework 390,000 544,000 Preventive maintenance 304,000 440,000 Material Inspection 150,000 210,000 Field Testing 400,000 300,000 Total costs $2,292,600 $2,673,400 Required: a. Prepare a cost of quality (COQ) report for 2021 and 2022, calculate…
22. Glenn Medical Center has seen a growth in patient volume since its primary competitor decided to relocate to a different area of the city. To accommodate this growth, a consul- tant has advised Glenn Medical to invest in a positron-emission tomography (PET) scanner. The cost to implement the unit would be $4,000,000. The useful life of this equip- ment is typically about six years, and it will be depreciated over a six-year life to a $400,000 salvage value. Additional patient volume will yield $3,000,000 in new revenues the first year. These first-year total revenues will increase by $600,000 each year thereafter, but the unit is expensive to operate. Additional staff and variable costs, excluding depreciation expense, will come to $2,200,000 the first year, but these expenses are expected to rise by $400,000 each year thereafter. Over the life of the machine, net working capital will increase by $18,000 per year for six years. a. Assuming that Glenn Medical Center is a…

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