Required:Part A1. Calculate the total expected manufacturing cost per unit of making ECs in 2020?2. Suppose the capacity currently used to make ECs will become idle if Cari Pumppurchases ECs from Furry Deals. Using quantitative analysis alone, should Cari Pumpmake ECs or buy them from Furry Deals?3. Suppose that if Cari Pump purchases ECs from Furry Deals, its best alternative use ofthe capacity currently used for ECs is to make and sell special electronic components(SECS) to the Spec Company. Cari Pump estimates the following incrementalrevenues and costs from SECs:Total expected incremental future revenues$2,200,000Total expected incremental future costs$2,350,000On the basis of quantitative analysis alone, should Cari Pump make ECs or buy them fromFurry Deals? In today's fast-paced business environment, decision making is a critical task for managers.Making the right decisions is vital to the success of a company, and it requires access torelevant information.Cari Pump (CP) Company manufactures water pumps. An important part of the pump is itselectronic component (EC). Cari Pump collects data with the following cost informationabout the costs of making ECs in 2019 and the expected costs in 2020:Current Costs (2019) Expected Costs (2020)Fixed manufacturing costFixed manufacturing overhead costs thatcan be avoided if ECs are not madeFixed manufacturing overhead costs of plantdepreciation, insurance, and administration thatcannot be avoided even if ECs are not madeVariable manufacturing costsDirect material cost per ECDirect manufacturing labor cost per ECVariable manufacturing cost per batch for setups,Materials handling, and quality control360,000850,000$ 200602,000360,000850,000$ 190551,800

Total manufacturing cost = Direct materials + Direct labor + Variable manufacturing overhead + Fixed…

Answered: Required: Part A 1. Calculate the total…

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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Heat Inc. sells computer hard drives, and the market is competitive (i.e., sales price will not be affected by Heat's sales volume). Its EBIT for 2022 was $69,000 when the sales quantity was 500 units. In 2023, its EBIT was $119,000 when the sales quantity was 700 units. a) Calculate its contribution margin per unit and total fixed costs. b) Calculate the degree of operating leverage for 2022 and 2023. c) If Heat changes its production technology by doubling its fixed costs and the breakeven (indifferent) quantity is 1, 120 units, find the new contribution margin. Heat has $40,000 debt that pays annual interest of 15% and 2,000 outstanding common shares that are trading at $25. Its tax rate is 30% . d) Calculate EPS for 2022 and 2023. e) Calculate the degree of financial leverage for 2022 and 2023. f) Calculate the degree of total leverage for 2022 and 2023. g) Heat considers borrowing $20,000 new debts (that also pay 15% interest) to buy back common shares (at current price of $25 per…
1. Compute the annual net cost savings promised by the automated welding machine. 2a. Using the data from (1) above and other data from the problem, compute the automated welding machine’s net present value. 2b. Would you recommend purchasing the automated welding machine? 3. Assume that management can identify several intangible benefits associated with the automated welding machine, including greater flexibility in shifting from one type of product to another, improved quality of output, and faster delivery as a result of reduced throughput time. What minimum dollar value per year would management have to attach to these intangible benefits in order to make the new welding machine an acceptable investment?
3
Heat Inc. sells computer hard drives, and the market is competitive (i.e., sales price will not be affectedby Heat’s sales volume). Its EBIT for 2022 was $69,000 when the sales quantity was 500 units. In 2023,its EBIT was $119,000 when the sales quantity was 700 units.a) Calculate its contribution margin per unit and total fixed costs.b) Calculate the degree of operating leverage for 2022 and 2023.c) If Heat changes its production technology by doubling its fixed costs and the breakeven(indifferent) quantity is 1,120 units, find the new contribution margin.Heat has $40,000 debt that pays annual interest of 15% and 2,000 outstanding common shares that are trading at $25. Its tax rate is 30%. d) Calculate EPS for 2022 and 2023.e) Calculate the degree of financial leverage for 2022 and 2023.f) Calculate the degree of total leverage for 2022 and 2023.g) Heat considers borrowing $20,000 new debts (that also pay 15% interest) to buy back common shares (at current price of $25 per share),…
REQUIRED Use the information provided below to answer the following questions: 3.1. Calculate the Payback period for the HMC. 3.2. Calculate the Net Present Value for both the HMC and VMC. 3.3. Calculate the Internal Rate of Return (IRR) for the HMC and VMC. 3.4. Which configuration of the CNC machining centres should SMT purchase, if any? Motivate your answer by referring to the answers obtained in questions 3.3 and 3.4. INFORMATION Southern Manufacturing Tools Limited (SMT) is considering the purchase of a Computer Numerical Control (CNC) machining centre for its operations. Two configurations of the CNC machining centres are available: horizontal CNC machining centre (HMC) and vertical CNC machining centre (VMC). Both the HMC and VMC will require an initial investment of R10 000 000, will have a useful life of 7 years and a residual value of R1 500 000. SMT uses the straight-line method of depreciation. The expected net cash inflows of the VMC are expected to be R2 100 000…
Hazlett & Family is organized into two geographic markets Northern and Southern. The company makes an off-road vehicle for recreation and agricultural use. The vehicle is sold in three models, depending on the power and options. The three models, from least expensive to most expensive, are the H-L, H-LX, and H-LXS. The company's financial staff has prepared the following forecasted income statement for the upcoming fiscal year (in thousands of dollars): Sales revenue Cost of goods sold Gross margin Marketing costs Administrative costs Total marketing and administrative Operating profits Total $ 59,400 46,050 $ 13,350 4,875 2,421 $ 7,296 $ 6,054 Management has expressed special concern with the Southern market because of the extremely poor return on sales. This market was entered a year ago because it seemed like the best opportunity for growth. Hazlett & Family knew that it would take some time to build profitability in the market, but there has been no noticeable change in the low…
A firm currently has extra warehouse space that it is renting out to a 3rd party for $10,000 a month. Due to higher than expected growth, the firm would like to expand and would like to use this warehouse space that is currently being rented to the 3rd party. Which of the following is true? This is an externality and should be included This is an externality and should not be included This is an opportunity cost and should be included This is an opportunity cost and should not be included This is an sunk cost and should be included This is an sunk cost and should not be included
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Highknob Co is thinking about introducing a new product.Below are the possible levels of unit sales and the probabilities of their occurrence. What is the expected value of the new product? Possible Market Reaction Sales in Units Probabilities Low Response 20 .10 Moderate Response 40 .20 High Response 65 .40 Very High Response 80 .30
28.2) Use this information for Carmen Co. to answer the question that follow. Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $22.15 per pound and costs $14.65 per pound to produce. Product D would sell for $39.45 per pound and would require an additional cost of $10.35 per pound to produce. What is the differential cost of producing Product D? a.$8.28 per pound b.$12.42 per pound c.$6.21 per pound d.$10.35 per pound
Gadubhai
hello, help please with B and C

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