Maureen is currently looking into a business opportunity that will require her tomanufacture branded match T-shirts for a local cricket club. Although she thinks itmight be a good opportunity, she is a bit wary of accepting the contract as her freetime is limited and she will only be able to produce 100 T-shirts per month.T-shirts will be sold at R200 each to club members.pendent institute of tducation Pty ud 2020The costs associated with the opportunity are as followsDescriptionCostsCost of material for T-shirtR40 per shirtCost of printingRS per shirtLabour costsR25 per shirtVariable overhead costsR10 per shirtFixed overhead costsRIS 000 per monthRequired:Calculate the break even point in units and advise Maureen whether she shouldtake up the opportunity or not Provide a reason for your answer.

Break-even simply refers to covering all our costs without making a profit. It is a point at which a…

Answered: Maureen is currently looking into a…

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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Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $4.86 million per year. Your upfront setup costs to be ready to produce the part would be $7.76 million. Your discount rate for this contract is 8.3%. a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in the value of your firm? a. What does the NPV rule say you should do? The NPV of the project is $ million. (Round to two decimal places.)
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $4.85 million per year. Your upfront setup costs to be ready to produce the part would be $7.94 million. Your discount rate for this contract is 8.3%. a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in the value of your firm? a. What does the NPV rule say you should do? The NPV of the project is $ million. (Round to two decimal places.)
You own a piece of raw land in an up-and-coming area in Gotham City. The costs to construct a building increase disproportionately with the size of the building. A building of q square feet costs 0.1*q^2 to build. After you construct a building on the lot, it will last forever, but you are committed to it: You cannot put another building on the lot. Buildings currently rent at $ 97 per square foot per month. Rents in this area are expected to increase in five years. There is a 49 % chance that they will rise to $ 199 per square foot per month and stay there forever and a 51% chance that they will stay at $ 97 per square foot per month forever. The cost of capital is fixed at 11.9% per year. a. Should you construct a building on the lot right away? If so, how large should the building be? b. If you choose to delay the decision, how large a building will you construct in each possible state in five years? (Make sure to state how big of a building you build if the rent is $199/sq…
Kim Davis has decided to purchase a cellular phone, but she is unsure about which rate plan to select. The "regular" plan charges a fixed fee of $55 per month for 1,000 minutes of airtime plus $0.33 per minute for any time over 1,000 minutes. The "executive" plan charges a fixed fee of$100 per month for 1,200 minutes of airtime plus $0.25 per minute over 1,200 minutes. a. If Kim expects to use the phone for 21 hours per month, which plan should she select? b. At what level of use would Kim be indifferent between the two plans?
Billy Bob's Crab & Oyster Shack wants to reduce the cost of labour by replacing some labour with machines. If Billy Bob's were to purchase a machine to shuck the oysters, it can save $50,000 a year for 10 years. The new machine will cost $650,000 and it will be worth $50,000 at the end of the 10 year period. The firm believes it will need $10,000 in spare parts inventory (increase in NWC), which it can sell for the $5,000 at the end of the project. The machine has a 20% CCA rate and the firm has a 15% tax rate. If they want a 20% return on their investment what is the NPV? Round your answer to the nearest dollar, no dollar sign, no commas, put negative sign if needed.
7. Canary Ltd. owns a yacht that is in need of repair and which was purchased for £6,800. The company is working to full capacity but is considering refurbishing the yacht for resale. Workers who are paid £20 per hour will carry out the refurbishment and it is estimated that 200 hours work is required. The normal labour charge for customers is £20 per hour. The company believes that the yacht could be sold for £6,200 in its current condition. Materials costing £1,000 would be required to carry out the refurbishment. Calculate the minimum resale price that the business would have to charge to justify the refurbishment of the yacht: A. £15,200 В. £11,200 С. £10,200 D. £6,200
To recap, W.T.’s planning on the following: Newspaper ad $120 per month Social media manager $100 per month; $1 per job scheduled Payment collection $0.75 per job Gas $4.00 per job Considering his analysis of similar services and to keep things simple, W.T. plans to price all jobs the same and charge $15 per job. Because of this flat rate, he anticipates he’ll likely need to create different types of “jobs”. For example, purchasing a list of items at the grocery store would be one job, while a bundle of 2-3 small errands such as picking up dry cleaning and prescriptions, might be considered one job. We’ll deal with those details later. For now, assume that all jobs are priced at $15 each and all have the associated variable expenses listed above. Because this will be a new business, W.T. knows business will likely be slow at the beginning. Complete the following table assuming W.T. completes 10 jobs in a single month. Item Per Job Total (10…
Refer to the three proposals that the company was considering to assist the previously disadvantaged women and answer each of the questions independently. (You are advised to use the expanded contribution margin model to present your answers.) Based on the figures achieved for July to December 2022, calculate the selling price per litre that would have enabled the service station to break even. Based on the figures achieved for July to December 2022, how many litres of diesel would have had to be sold to achieve an operating profit of R2 per litre? Calculate the total Contribution Margin and Operating Profit/Loss per month if Proposal 1 is implemented. How many litres of diesel need to be sold each month to achieve the operating profit of R25 000 per month, if Proposal 2 is accepted? Calculate the saving in monthly fixed costs that is necessary to yield an operating profit of R30 000 if Proposal 3 is accepted.
3
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $5.17 million per year. Your upfront setup costs to be ready to produce the part would be $7.81 million. Your discount rate for this contract is 8.4%. a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in the value of your firm?
Option 1: He needs to rent a kiosk cart in the mall which will cost $600 a month. In addition, there are marketing costs for signage and business cards, which have an initial cost of $1,200. Zach will also need to create a website, Instagram page and Facebook ads that will cost him $200 a month. To start the business, his tools would cost $500. The total repairs would include a flat rate of $30 for an assessment and another $100 to fix the phone. The supplies to complete each phone would cost $40. Option 2: Zach needs a way to source old phones from people who no longer need them. He would pay $50 for a used phone in decent condition and then refurbish it for $40. He would subsequently sell the device for $200. Zach would no longer need to set up a kiosk in the mall, but rather manage everything online. This means that he would need to create a website, Instagram page and Facebook ads which would cost him $200 a month. He would also need to spend $500 on tools to begin. Based on the…
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $4.93 million per year. Your upfront setup costs to be ready to produce the part would be $7.95 million. Your discount rate for this contract is 7.9%. a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in the value of your firm? a. What does the NPV rule say you should do? The NPV of the project is $ million. (Round to two decimal places.)

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