DDQuestion 6Paola Farms, Inc. produces a crop of chickens at a total cost of $66,000. The production generates60,000 chickens which can be sold for $1 each to a slaughtering company, or the chickens can beslaughtered in house and then sold for $2.50 each. It costs $65,000 more to turn the annual chickencrop into chicken meat.If Paola Farms slaughters the chickens, how much incremental profit or loss it would report?Should Paola Farms slaughter the chickens before selling?Question 74Elmdale Company has a machine that affixes labels to bottles. The machine has a book value of $80,Cand a remaining useful life of 3 years and no salvage value. A new, more efficient machine is available

To answer this question two scenarios has to be considered.First when chicken is sold to a…

Answered: Paola Farms, Inc. produces a crop of…

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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Underground Food Store has 3,000 pounds of raw beef nearing its expiration date. Each pound has a cost of $4.50. The beef could be sold "as is" for $3.00 per pound to the dog food processing plant, or roasted and sold in the deli. The cost of roasting the beef will be $2.80 per pound, and each pound could be sold for $6.50. What should be done with the beef, and why? If required, round final answers to two decimal places. The beef - processed further since the sales price by $ per pound and the cost only by per pound.
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.)
Lim has already spent $30,700 to manufacture a hamster food product called Pet Health. Lim currently has 10,000 bags of Pet Health on hand that can be sold for $94,480. Alternatively, Lim can process it further into a different product, Premium Pet, at an additional cost of $6,350. If Lim processes further, the Premium Pet can be sold for $102,900. This would result in revenue of: Multiple Choice $102,900. $100,830. $8,420. $2,070. $6,350.
Big Rock Brewery currently rents a bottling machine for $55,000 per year, including all maintenance expenses. The company is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $165,000. This machine will require $20,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $260,000. This machine will require $16,000 per year in ongoing maintenance expenses and will lower bottling costs by $11,000 per year. Also, $39,000 will be spent upfront in training the new operators of the machine. Suppose the appropriate discount rate is 9% per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as is the rental of the machine. Assume also that the machines are subject to a CCA rate of 45% and there will be a negligible salvage value in ten year's time (the end of each machine's life). The marginal corporate tax rate is 35%. Should Big Rock…
A dairy farmer has found that it costs $1.84 to produce each gallon of milk, and the daily fixed cost to maintain production is $345. If the farmer charges $3.29 per gallon of milk when he sells it to a large grocery store chain, how many gallons of milk does the farmer need to produce and sell to make a daily profit of $479? (Round your answer to the nearest whole number of gallons.) The farmer needs to produce and sell gallons of milk to make a daily profit of $479.
Crazy Burger Shop has the following investment opportunity: Burger machinery at t=0 costs $6,000. The cost of making burgers is $2,000 per year at t=1, t=2, and t=3. The burger machinery is depreciated using the straight-line method to $1,500 over 3 years. The market value of the burger machinery after three years is $2,600. Estimated annual sales are $4,500 per year at t=1, t=2, and t=3. The required return is 15%. The tax rate is 18%. Assume no working capital requirements. What is the NPV of this project? A. $259.97 B. $1,006.62 C. $876.44 D. $-702.92
A machine costs $250,000 to purchase and will provide $60,000 a year in benefits. The company plans to use the machine for 12 years and then will sell the machine for scrap, receiving $15,000. The company interest rate is 10%. Should the machine be purchased? 5-4 A IBP Inc. is considering establishing a new machine to automate a meatpacking process. The machine will save $55,000 in labor annually. The machine can be purchased for $225,000 today and will be used for 10 years. It has a salvage value of $12,500 at the end of its useful life. The new machine will require an annual maintenance cost of $11,000. The corporation has a minimum rate of return of 9%. Do you recommend automating the process?
Underground Food Store has 4,000 pounds of raw beef nearing its expiration date. Each pound has a cost of $4.50. The beef could be sold “as is” for $3.00 per pound to the dog food processing plant, or roasted and sold in the deli. The cost of roasting the beef will be $2.80 per pound, and each pound could be sold for $6.50. A) What is the gross profit/loss per pound if the raw beef is sold "as is" to the dog food processing plant? If it is negative, use a dash - not parentheses ( ). B) What is the gross profit/loss per pound if the raw beef is roasted and sold in the deli? If it is negative, use a dash - not parentheses ( ). C) Should the beef be sold "as is" or roasted and sold in the deli?
Sandhill, Inc. produces a crop of chickens at a total cost of $78,800. The production generates 72.000 chickens which can be sold for $2 each to a slaughtering company, or the chickens can be slaughtered in house and then sold for $3.75 each. It costs $78,000 more to turn the annual chicken crop into chicken meat. (a) If Sandhill slaughters the chickens, determine how much incremental profit or loss it would report.
Alfa bakery is considering replacing its existing automated oven. The current market value of the oven is $14,600. The value of the oven depreciates by 27% per year. The bakery requires $17,100 in maintenance costs per year as of today. The maintenance costs are expected to increase by $5,300 per year as the oven gets older. If the MARR is 11.8% and the production is 34 cakes per day; should Alfa bakery instead replace it by outsource their automated baking production to an external bakery for $2.20 per cake?
Jeff & Bezos is a fresh groceries delivery company. The company has access to borrowing funds at a pre-tax rate of 8 % per year. Jeff & Bezos pays income taxes using 22 % tax rate. The company would like to start using high-speed low-altitude drones to deliver grocery purchases directly to residential customers' backyards. The required fleet of drones costs $7,500,000. The fleet of drones, due to their heavy usage, would have no salvage value in four years. If the company chooses to buy them, the drones would be losing their economic value following the three-year property class under the MACRS depreciation method. Instead of buying the fleet of the drones, Jeff & Bezos is also contemplating leasing them for an estimated pre-tax annual cost of $2,205,000 per year for four years from a different company, Nets & Flicks, that currently owns the required number of the drones. Jeff & Bezos' net advantage to leasing, a.k.a. NAL, equals (Do not round intermediate calculations and round your…
Broomfield Corp. has 1,000 carton of oranges that cost $50 per carton in direct costs and $26.50 per carton in indirect costs and sold for $70 per carton. The oranges can be processed further into orange juice at an additional cost of $22.50 and sold at a price of $126. The incremental income (loss) from processing the oranges into orange juice would be: Multiple Choice ($100,500). $103,500. $92,500. $100,500. $93,500.

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