Required information You work for Bellevue Window Products. While performing an analysis for a new window product, you found a report from last year that provided the following information regarding the manufacture of a similar product: annual production rate = 40,000 units; selling price = $74 per unit; fixed production cost = $240,000 per year; variable production cost = $1,630,000 per year; and variable selling expenses = $89,000 per year. As a first cut, you decide to use this information to estimate the annual production rate that would generate a profit of $1,000,000 per year. The annual production rate is estimated to be units per year.

Required information You work for Bellevue Window Products. While performing an analysis for a new window product, you found a report from last year that provided the following information regarding the manufacture of a similar product: annual production rate = 40,000 units; selling price = $74 per unit; fixed production cost = $240,000 per year; variable production cost = $1,630,000 per year; and variable selling expenses = $89,000 per year. As a first cut, you decide to use this information to estimate the annual production rate that would generate a profit of $1,000,000 per year. The annual production rate is estimated to be units per year.

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 18M

See similar textbooks

Similar questions

Vandenberg Inc., produces and sells two products; a celling fan and a table fan.Vandenberg plans to sell 30,000 ceiling fans and 70,000 table fans in the coming year.Product price and cost information includes; Common fixed selling and ad,inistrative expenses total $85,000. Required: 1. What is the sales mix estimated for the next year (calculated to the lowest whole number for each product)? 2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans.How many ceiling fans and table fans are sold at break-even? 3. Prepare a contribution-margin based income statement for Vandenberg,Inc.,based on the unit sales calculated in Requirement 2. 4. What if Vandenberg,Inc.,wanted to earn operating income equal to $14,000? calculate the number of ceiling fans and table fans that must be sold to earn this level of operating income.(hint;Remeber to form a package of ceiling fans and table fans based on the sales mix and to first calculate the number of packages to…
A thermoplastic film manufacturer is trying to decide between 5 types of thermoforming molding processes to be added to its molding operation. The estimated costs and revenues are shown below. Compare them on the basis of the IRR method and determine which process should be selected if the company's MARR is 7% per year. Select the best alternative by performing an IRR incremental analysis. Justify your answer.
After conducting a market research study, Magnificent Manufacturing decided to produce a new interior door to complement its exterior door line. It is estimated that the new interior door can be sold at a target price of $270. The annual target sales volume for interior doors is 29,000. Magnificent has target operating income of 40% of sales. What are target sales revenues? A. $4,698,000 B. $3,132,000 C. $10,962,000 D. $7,830,000
Thomasville Furniture Industries offers several types of high-performance fabrics that are capable of withstanding chemicals as harsh as chlorine. A Midwestern manufacturing company that uses fabric in several products has a report showing that the present worth of fabric purchases over a specified 5-year period was $900,000. If the costs are known to have increased geometrically by 5% per year during that time and the company uses an interest rate of 15% per year for investments, what was the cost of the fabric in year 1?
Answer the following short problems: 1. Wergas, Inc. has determined the following for a given year: Economic order quantity Total cost to place purchase orders for the year Cost to place one purchase order Cost to carry one unit for 1 year What is Wergas' estimated annual usage in units? 5,000 units P 10,000 P 50 P4 2. Alilio Company is planning to build a new plant in Batangas City. The plant is expected to provide additional sales as follows: First Year Second Year Third Year P 2.0 million P2.5 million P 3.0 million (maximum capacity) The financial manager of Alilio estimates that for every peso of sales, P0.25 must be invested in current as sets. If all discounts are taken and bills are paid on time, accounts payable average P 0.04 per peso of sales. Other current liabilities, such as wages payable, typically average P0.05 per peso of sales. Required: a. Estimate the working capital investments required for the new plant in the l", 2nd & 3rd year of operations. b. How do these…
Choose the correct letter of answer Polish Company is a leading local maker of Christmas decors. This coming Christmas season, the company plans to introduce a new model of decor set which will give the company a sizable amount of profit. For this project, the fixed cost during the production season will amount to P340,000; the variable cost per unit is P700. The selling price will be pegged at P2,000. If you were to develop a mathematical model for the total profit from selling the decors, how would you present it? Let P indicate the total profit. a. P = 2,000x – (340,000 + 700x)b. P = 340,000 – 700xc. P = 340,000 + 700x d. none of the above
Choose the correct letter of answer Polish Company is a leading local maker of Christmas decors. This coming Christmas season, the company plans to introduce a new model of decor set which will give the company a sizable amount of profit. For this project, the fixed cost during the production season will amount to P340,000; the variable cost per unit is P700. The selling price will be pegged at P2,000. If you were to develop a mathematical model for the total cost of producing the decors, how would you present it? Let x indicate the number of units produced. a. TC = 340,000 – 700xb. None of the abovec. TC = 2,000x – (340,000 + 700x)d. TC = 340,000 + 700x
Utah Utensil has developed a new kitchen utensil. The firm has conducted significant market research and estimated the following pattern for sales of the new product: Year Expected Volume (Units) Expected Price per Unit 1 41,280 $19 2 48,000 20 3 90,000 16 4 34,400 12 The firm wants to net a minimum of $3.50 per unit in profit over the product’s life, and selling and administrative expenses are expected to average $43,000 per year. Calculate the life cycle target cost per unit to produce the new utensil. Note: Round your answer to two decimal places (i.e., round 2.4555 to 2.46). $
You are entering the widget business. It costs$500,000, payable in year 1, to develop a prototype.This cost can be depreciated on a straight-line basisduring years 1–5. Each widget sells for $40 and incursa variable cost of $20. During year 1, the market sizeis 100,000, and the market is growing at 10% peryear. You believe you will attain a 30% market share.Profits are taxed at 40%, but there are no taxes onnegative profits.a. Given your other assumptions, what market share isneeded to ensure a total free cash flow (FCF) of $0over years 1 to 5? (Note: FCF during a year equalsafter-tax profits plus depreciation minus fixedcosts, if any.)b. Explain how an increase in market share changesprofit.c. Explain how an increase in market size growthchanges profit.d. Use Excel’s auditing tool to show how the marketgrowth assumption influences your spreadsheet.
You are doing some financial analysis research for your work and managed to get (incomplete) data. You will use this data to deduce the required information. You can assume 365 days in a year. a) Alpha Co. reported a cost of goods sold of $64,380.00 and an accounts payable balance of $16,700.00 last year. Compute the average time taken to pay suppliers. Discuss the significance of a longdays’ costs in payables for the firm. b) Bravo Ltd. equity multiplier is 1.93, its total asset turnover is 2.65, and its profit margin is 4.20 percent. Compute the Return on Equity (ROE). Explain the impact on ROE, should the total asset turnover decline next year. c) Charlie Inc. has a profit margin of 7.90 percent, a total asset turnover of 1.54, and a Return on Equity (ROE) of 13.47 percent. Solve for the debt-equity ratio. d) Delta GMBH’s ROE is 8.9 percent. Sales are $2,956,000.00. Total debt ratio is 0.3743. Total debt is $964,000.00. Determine the return on assets (ROA).
A company purchases a component, which is critical in the production process, from an international supplier. Recently, quality problems with this component have increased. For this reason, managers of the company are considering of producing this part in-house. The economic life of the new production system will be 8 years. The savings and expenditures related to the new production system are given below. The MARR is 15%. According to the information, answer the questions from 8 to 9. Capital expenditures (Investment costs): Building: 500,000 TL Machines and equipment: 2,200,000 TL The annual saving from material and quality control: 5,000,000 TL Annual operating cost: 1,500,000 TL Annual income tax: 800,000 TL Salvage value: 1,500,000 TL 8. What is the discounted payback period of the new production system? A.Less than 1 year B.1 year C.between 1 and 2 years D.between 2 and 3 years 9. What is the net present worth of the new production system? A.9,415,000 TL…
Desk company has a product that it currently sales in the market for $50 per unit. Desk has develop in new feature that, if added to existing product, will allow Desk to receive a price of $65 per unit. The total cost of adding this new future is $44,000 and Desk expects to sell 2,800 units in the coming year. What is the net effect on the next-year's operating income of adding the feature to the product?