Remerowski Corporation Inc. asks you to estim the cost to purchase a new piece of production equip- ment. The company purchased this same type of equipment in the past for $10,000. The original equipment had a capacity of 2000 units, while the new equipment has a capacity of 1000 units. The power-sizing exponent for this type of equipment is 0.28. In addition, the cost index for this type of equipment was 126 when the original unit was purchased and is now 160. If Remerowski uses an 8% annual interest rate to evaluate equipment pur- chases, estimate the cost to purchase the new piece.

Remerowski Corporation Inc. asks you to estim the cost to purchase a new piece of production equip- ment. The company purchased this same type of equipment in the past for $10,000. The original equipment had a capacity of 2000 units, while the new equipment has a capacity of 1000 units. The power-sizing exponent for this type of equipment is 0.28. In addition, the cost index for this type of equipment was 126 when the original unit was purchased and is now 160. If Remerowski uses an 8% annual interest rate to evaluate equipment pur- chases, estimate the cost to purchase the new piece.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A company must decide between scrapping or reworking units that do not pass Inspection. The company has 10,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $31,000 or reworked for $45,000 and then sold for $85,000. (a) Prepare a scrap or rework analysis of Income effects. (b) Should the company sell the units as scrap or rework them? (a) Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income Incremental income (b) The company should: Scrap Rework
Howell Corporaon produces an execuve jet for which it currently manufactures a fuel valve; the cost ofthe valve is indicated below:Cost per UnitVariable costsDirect material $900Direct labor 600Variable overhead 300Fixed costsDepreciaon of equipment 500Depreciaon of building 200Supervisory salaries 300The company has an offer from Duvall Valves to produce the part for $2,000 per unit and supply 1,000 valves(the number needed in the coming year). If the company accepts this offer and shuts down producon ofvalves, producon workers and supervisors will be reassigned to other areas. The equipment cannot be usedelsewhere in the company, and it has no market value. However, the space occupied by the producon of thevalve can be used by another producon group that is currently leasing space for $55,000 per year.What is the incremental savings of buying the valves? (The answer should be stated in a per‐unit format and is a positive number)
Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $14.00 per unit. The unit cost for the business to make the part is $22.00, including fixed costs, and $11.00, excluding fixed costs. If 39,879 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it? a.$558,306 cost decrease b.$119,637 cost increase c.$319,032 cost increase d.$119,637 cost decrease
17. Calculate the prime costs and conversion costs if a company incurs the following to produce wine glasses: $4,000 for molten glass, $15,000 paid to employees who create the glasses, and $2,000 paid to employees who repair equipment used in the production facilities. 28. As of January 1, 20Y5, Tippy Cup Co. had a balance of $15,000 for raw materials inventory. The company's ending balance of raw materials inventory totaled $13,900. Every four months, the company purchases 250 pounds of raw materials at $25 a pound. Calculate the cost of direct materials used for the year. 29. Tippy Cup Co. also incurred $10,550 for factory overhead and 250 hours of direct labor at $10.30 per hour. Using the cost of direct materials used calculated in Exercise 28, determine the total manufacturing costs incurred for the year.
Answer the following questions. A company has an inventory of 1,350 assorted parts for a line of missiles that has been discontinued. The inventory cost is $76,000. The parts can be either (a) remachined at total additional costs of $27,500 and then sold for $33,000 or (b) sold as scrap for $4,000. Which action is more profitable? Show your calculations. A truck, costing $101,500 and uninsured, is wrecked its first day in use. It can be either (a) disposed of for $15,500 cash and replaced with a similar truck costing $102,000 or (b) rebuilt for $82,000, and thus be brand-new as far as operating characteristics and looks are concerned. Which action is less costly? Show your calculations. 1. 2. 1. A company has an inventory of 1,350 assorted parts for a line of missiles that has been discontinued. The inventory cost is $76,000. The parts can be either (a) remachined t total additional costs of $27,500 and then sold for $33,000 or (b) sold as scrap for $4,000. Which action is more…
U-RIDE, Incorporated currently produces the electric engines that are used in golf carts made and sold by the Company. Electco has offered to sell the electric engines to U-RIDE at a price of $291 each. Current production information follows: Unit-level material and labor $240 Facility-level depreciation of manufacturing equipment Product-level engine production supervisor's salary $6,300 /month $3,300 /month $21,500 Annual facility-level utilities U-RIDE is currently operating profitably producing and selling 3,300 engines a year using 80% of its manufacturing capacity. Which of the following is true? Multiple Choice O O U-RIDE should make the engines for cost savings of $51 per unit. Buying the units would increase U-RIDE's cost by $39 per unit. U-RIDE has avoidable costs of greater than $291 per unit and should therefore buy the engines. Buying the units would increase profitability by $90 per unit.

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