Sew Perfect specialises in clothing alterations and repairs. With a slogan of 'You ask, we sew', they pride themselves in the fact that they deliver quick, quality work, and that no request is too big or too small for them. They have built up quite a strong reputation in the community where they are located, and are looking to expand their reach to customers outside of the traditional borders of their business. As part of their expansion plan, they are looking to replace some of their outdated sewing machines with state-of-the-art, heavy-duty, industrial Swiss sewing machines. The new machinery costs R75 000 and a Swiss representative must install the machines at Sew Perfect's factory shop at a cost of R3 200. Sew Perfect can sell their old machines for a total of R20 000, but must deliver them to the buyer at a cost of R380. Sew Perfect originally bought the machines 6 years ago for a total of R38 000, and depreciated it on a straight-line basis over a period of 10 years. The firm is subject to a 28% tax rate. The capital expenditure results in an increase in net working capital of R18 000.

Q: What is the Remaining Capital Value (RCV)?

A: Salvage value is defined as the remaining value of the fixed asset that is expected to be recovered…

Q: What is the cost of capital rate in the question?

A: Cost of capital is the WACC of the project. WACC is equal to weighted average cost of capital. WACC…

Q: capitalized?

A: In accounting, the term "capitalized expenditures" refers to expenses that are recorded as assets on…

Q: Why should the capital expenditures be capitalized?

A: Capital Expenditures:   Capital expenditures are those which provide future economic benefits by…

Q: When does the Capital expenditures occur?

A: Capital expenditure is the money spent by business on acquiring fixed assets like land, building…

Q: What should be done to find the equivalent present worth of the actual dollar amount?

A: Present value is the concept of discounting future value to bring it to today’s worth.

Q: What is capital assets?

A: Capital asset means property of any kind like land, machinery, building, computer, vehicles,…

Q: When should the investment in working capital be treated as capital expenditure?

A: Working capital:   It is the form of capital used by the business for day-to-day operations. Working…

Q: orking capital?What are types of worki

A: Working capital or net working capital is total current assets less total current liabilities as…

Q: discuss the advantages and disadvantages of using return on capital employed ?

A: We have to find the advantages and disadvantages of using return on capital employed (ROCE).

Q: Define the term Capital (Ownership) Costs?

A: The money value of goods and services consumed by the consumers and purchased by the producers is…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.