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 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?
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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