Ac[The following information applies to the questions displayed below.]Beacon Company is considering automating its production facility. The initial investment in automation would be $10.76million, and the equipment has a useful life of 8 years with a residual value of $1,160,000. The company will usestraight-line depreciation. Beacon could expect a production increase of 33,000 units per year and a reduction of 20percent in the labor cost per unit.Production and sales volumeSales revenueVariable costsDirect materialsDirect laborVariable manufacturing overhead iTotal variable manufacturing costsContribution marginFixed manufacturing costsNet operating incomeCurrent (noautomation)Proposed(automation)89,000 units122,000 unitsPerPerUnitTotalUnit$100$7$100Total$ 7$ 20$ 202529954$ 462?$ 51$ 1,180,000$ 2,190,00027Required:1-a. Complete the following table showing the totals. (Enter your answers in whole dollars, not in millions.)Current (no automation)89,000 unitsProduction and Sales VolumePer UnitSales revenue$100Variable costsTotal$Proposed (automation)122,000 unitsPer UnitTotal100

Companies may determine how changes in sales volume and both fixed and variable expenses influence…

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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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Your company is considering a project which will require the purchase of $715,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $256,000. Initial net working capital equal to 32.00% of sales will be required. All of the net working capital will be recovered at the end of the project. The firm requires a 10.00% return on similar investments. The tax rate is 35%, and the project life is 5 years. There are no other operating expenses. If the equipment is in a 33.00% CCA class, what is the present value of the CCA tax shield? Options $153,510 $157,348 $161,186 $165,024 $168,861
[The following information applies to the questions displayed below.] Beacon Company is considering automating its production facility. The initial investment in automation would be $10.31 million, and the equipment has a useful life of 8 years with a residual value of $1,030,000. The company will use straight- line depreciation. Beacon could expect a production increase of 43,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation) 82,000 units Proposed (automation) 125,000 units Production and sales volume Per Unit Per Total Unit Total Sales revenue Variable costs Direct materials Direct labor Variable manufacturing $ 96 $ ? $ 96 $ ? $ 16 $ 16 15 ? 9 9 costs overhead Total variable manufacturing Contribution margin 40 ? $ 56 ? $ 59 ? Fixed manufacturing costs $ 1,240,000 $ 2,330,000 Net operating income. ? ? 5. Recalculate the NPV using a 10 percent discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present…
10) (Break-even analysis) The Marvel Mfg. Company is considering whether or not to construct a new robotic production facility. The cost of this new facility is $612,000 and it is expected to have a six-year life with annual depreciation expense of $102,000 and no salvage value. Annual sales from the new facility are expected to be 2,010 units with a price of $1,060 per unit. Variable production costs are $630 per unit, and fixed cash expenses are $76,000 per year. a. Find the accounting and the cash break-even units of production. b. Will the plant make a profit based on its current expected level of operations? c. Will the plant contribute cash flow to the firm at the expected level of operations? Question content area bottom Part 1 a. The accounting break-even units of production is______units.
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A company is considering replacing an old piece of machinery, which cost $597,100 and has $352,000 of accumulated depreciation to date, with a new machine that has a purchase price of $484,900. The old machine could be sold for $64,000. The annual variable production costs associated with the old machine are estimated to be $155,100 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,700 per year for eight years. a. Prepare a differential analysis dated April 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) April 29 Continuewith OldMachine(Alternative 1) ReplaceOldMachine(Alternative 2) DifferentialEffecton Income(Alternative 2) Revenues:…
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! Required information [The following information applies to the questions displayed below.] Beacon Company is considering automating its production facility. The initial investment in automation would be $7.40 million, and the equipment has a useful life of 6 years with a residual value of $1,040,000. The company will use straight- line depreciation. Beacon could expect a production increase of 36,000 units per year and a reduction of 20 percent in the labor cost per unit. Production and sales volume Sales revenue Variable costs Direct materials Direct labor Variable manufacturing overhead Total variable manufacturing costs Contribution margin Fixed manufacturing costs Net operating income Current (no automation) 77,000 units Net present value Per Unit $93 $16 25 10 51 $42 Total $ ? ? $ 1,240,000 ? Proposed (automation) 113,000 units Per Unit $93 $16 ? 10 ? $ 47 Total $ ? ? $ 2,330,000 ? 4. Using a discount rate of 14 percent, calculate the net present value (NPV) of the proposed…
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Required information [The following information applies to the questions displayed below.] Beacon Company is considering automating its production facility. The initial investment in automation would be $11.45 million, and the equipment has a useful life of 9 years with a residual value of $1,100,000. The company will use straight- line depreciation. Beacon could expect a production increase of 46,000 units per year and a reduction of 20 percent in the labor cost per unit. Production and sales volume Sales revenue Variable costs Direct materials Direct labor Variable manufacturing overhead Total variable manufacturing costs Contribution margin Fixed manufacturing costs Net operating income Payback period Current (no automation) 87,000 units years Per Unit $92 $19 25 9 53 $39 Total $ ? ? $ 1,100,000 ? Proposed (automation) 133,000 units Per Unit $92 $19 ? 9 ? $44 Total $ ? 3. Determine the project's payback period. (Round your answer to 2 decimal places.) ? $ 2,330,000 ?
Required information [The following information applies to the questions displayed below.] Beacon Company is considering automating its production facility. The initial investment in automation would be $7.52 million, and the equipment has a useful life of 6 years with a residual value of $1,100,000. The company will use straight- line depreciation. Beacon could expect a production increase of 47,000 units per year and a reduction of 20 percent in the labor cost per unit. Production and sales volume Sales revenue Variable costs Direct materials. Direct labor Variable manufacturing overhead Total variable manufacturing costs Contribution margin Fixed manufacturing costs Net operating income Current (no automation) 81,000 Proposed (automation) 128,000 units units Net present value Per Unit $94 $ 17 30 9 56 $ 38 Total $ ? ? 1,240,000 ? Per Unit $94 $ 17 ? 9 ? $44 Total $? ? 2,200,000 ? Required: 5. Recalculate the NPV using a 9 percent discount rate. (Future Value of $1. Present Value of…
Required information [The following information applies to the questions displayed below] Beacon Company is considering automating its production facility. The initial investment in automation would be $6.20 million, and the equipment has a useful life of 5 years with a residual value of $1,100,000. The company will use straight- line depreciation. Beacon could expect a production increase of 31,000 units per year and a reduction of 20 percent in the labor cost per unit. Production and sales volume Sales revenue Variable costs Direct materials Direct labor Variable manufacturing overhead Total variable manufacturing costs Contribution margin Fixed manufacturing costs Net operating income Current (no automation) 88,000 units Net present value Per Unit $93 $16 12124 25 52 $ 41 Total $7 7 1,090,000 2 Proposed (automation) 119,000 units Per Unit $93 $ 16 7 11 ? $46 Total $7 7 2,280,000 2 Required: 5. Recalculate the NPV using a 9 percent discount rate. (Future Value of $1. Present Value of…

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