Rory Compeny has an old machine with a book value of $77,000 and a remaning tve year usetu e. Rory is comsidering purchasingnew machine at a price of $103,000. Rory cen sel its old machine now for $82.000. The oid machine has variable manufacturing costsof $32.000 per yeaM. The new machine wili reduce varlable manufacturing costs by $12.800 per year over its five-year unetul e(a) Prepare a koep or roplace analysis of income effects for the machines.(b) Should the old machine be replaced?Complete this question by entering your answers in the tabs below.Requred A ReauredPrepare a kerp or replace analysis of income effects for the machinesincome inuraaseKeep er Haplase AnaysieKinRaplate(Decres if relacedRevenuesSale of eting maihineCostsPuthase of new maheVariate manutacuring costsImcome oan)

In keep or Replace analysis, Revenues and costs of Keeping the old Asset should be compared with…

Rory Company has an old machine with a book value ot $77000 and a remaning tve year usee. Rory is considering purchasinge new machine at a price of S103.000. Rory can sel s old machine now for $82.000 The old machine has variable manutacturng costs of $32.000 per yea The new machine wil reduce veriable manutacturing costs by $12800 per year over ts tveyear et e (a Prepare a keep or replace analysis of income effects for the machines (b) Should the old machine be replaced? Complete this question by entering your answers in the tabs below. Reured A Reured Prepare akep or replace analysis of income effects for the machines incress Keep er Replae Anyie Kan Rape (Dese Revenus Sa ofeting machine Coste Puhese of chre Varenauing ct oome

Rory Company has an old machine with a book value ot $77000 and a remaning tve year usee. Rory is considering purchasinge new machine at a price of S103.000. Rory can sel s old machine now for $82.000 The old machine has variable manutacturng costs of $32.000 per yea The new machine wil reduce veriable manutacturing costs by $12800 per year over ts tveyear et e (a Prepare a keep or replace analysis of income effects for the machines (b) Should the old machine be replaced? Complete this question by entering your answers in the tabs below. Reured A Reured Prepare akep or replace analysis of income effects for the machines incress Keep er Replae Anyie Kan Rape (Dese Revenus Sa ofeting machine Coste Puhese of chre Varenauing ct oome

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 8EB: Shonda & Shonda is a company that does land surveys and engineering consulting. They have an...

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Shonda & Shonda is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1.200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are as follows: A. What will be the impact on the break-even point if Shonda & Shonda purchases the new computer? B. What will be the impact on net operating income if Shonda & Shonda purchases the new computer? C. What would be your recommendation to Shonda & Shonda regarding this purchase?
Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.10. The machine will increase fixed costs by $11,750 per year. The information they will use to consider these changes is shown here. A. What will the impact be on the break-even point if Flanders purchases the new machinery? Round per unit cost answers to two decimal places. Current New Machine Units Sold 211,000 fill in the blank 1 Sales Price Per Unit $2.10 $fill in the blank 2 Variable Cost Per Unit $1.75 $fill in the blank 3 Contribution Margin Per Unit $0.35 $fill in the blank 4 Fixed Costs $49,000 $fill in the blank 5 Break-Even (in units) 140,000 fill in the blank 6 Break-Even (in dollars) $294,000 $fill in the blank 7 B. What will the impact be on net operating income if Flanders purchases the new machinery? Current New Machine Sales $443,100 $fill in the blank 8 Variable Costs 369,250 fill in the blank 9 Contribution Margin…
Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.10. The machine will increase fixed costs by $12,250 per year. The information they will use to consider these changes is shown here. A. What will the impact be on the break-even point if Flanders purchases the new machinery? Round per unit cost answers to two decimal places. Current New Machine Units Sold 214,000 fill in the blank 1 Sales Price Per Unit $2.15 $fill in the blank 2 Variable Cost Per Unit $1.70 $fill in the blank 3 Contribution Margin Per Unit $0.45 $fill in the blank 4 Fixed Costs $67,500 $fill in the blank 5 Break-Even (in units) 150,000 fill in the blank 6 Break-Even (in dollars) $322,500 $fill in the blank 7 B. What will the impact be on net operating income if Flanders purchases the new machinery? Current New Machine Sales $460,100 $fill in the blank 8 Variable Costs 363,800 fill in the blank 9 Contribution Margin…
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Anderson Inc. uses packing machines to prepare their product for shipping One machine costs $136,000 and lasts about 5 years before it needs to be replaced. The operating cost per machine is $6.000 a year ignoring taxes, what is the equivalent annual cost of one packing machine if the required rate of return is 12%? Multiple Choice $43,208 $51.036 $43728
Jackson amp; Sons uses packing machines to prepare its products for shipping. One machine costs $178,000 and lasts about 5 years before it needs replaced. The operating cost per machine is $16,000 a year. What is the equivalent annual cost of one machine if the required rate of return is 12 percent? Select one: O O O O O a. $81,006.15 b. $65,378.93 c. $54,224.08 d. $79,004.12 e. $38,556.67
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Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $49,000 and a remaining useful life of five years. It can be sold now for $59,000. Variable manufacturing costs are $47,000 per year for this old machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is five years. Purchase price Variable manufacturing costs per year Machine A $ 117,000 20,000 Machine B $ 130,000 12,000 (a) Compute the income increase or decrease from replacing the old machine with Machine A. (b) Compute the income increase or decrease from replacing the old machine with Machine B. (c) Should Lopez keep or replace its old machine? (d) If the machine should be replaced, which new machine should Lopez purchase? Complete this question by entering your answers in the tabs below. Req A Req B Req C and D Compute the income increase or decrease from replacing the old machine with Machine A.…
Windsor Co. has just purchased a $6,000,000 machine to produce big-screen TVs. The machine can be used for 10 years and is depreciated on a straight-line basis. Use the following information: Sales price per TV =$1,500 Variable costs per TV =$1,100 Fixed costs per year = $120,000 Tax rate =40% Discount rate = 8% How many TV must be produced and sold per year for you to receive any accounting profit? How many TV must be produced and sold per year for you to receive any economic profit? Compare your answer in parts (a) and (b). How are they related to each each and why
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Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.10. The machine will increase fixed costs by $12,000 per year. The information they will use to consider these changes is shown here. A. What will the impact be on the break-even point if Flanders purchases the new machinery? Round per unit cost answers to two decimal places. Current New Machine Units Sold 221,000 Sales Price Per Unit $2.10 Variable Cost Per Unit $1.70 Contribution Margin Per Unit $0.40 %24 Fixed Costs $60,000 Break-Even (in units) 150,000 Break-Even (in dollars) $315,000 B. What will the impact be on net operating income if Flanders purchases the new machinery? Current New Machine Sales $464,100 Variable Costs 375,700 Contribution Margin $88,400 Fixed Costs 60,000 Net Income (Loss) $28,400 C. What would your recommendation be to Flanders regarding this purchase? a. The new equipment will increase fixed costs substantially but net income will still…
To make an item inhouse, equipment costing $250,000 must be purchased. It will have a life of 4 years, an annual cost of $80,000, and each unit will cost $40 to manufacture. Buying the item externally will cost $100 per unit. At i = 15% per year, it is cheaper to make the item inhouse if the number per year needed is:a. above 1047 unitsb. above 2793 unitsc. equal to 2793 unitsd. below 2793 units