General Accounting The Western and Pacific Railroad has two divisions, the WesternDivision and the Pacific Division. The company recently invested$8,000,000 to maintain its railroad track. Pertinent data for thetwo divisions are as follows:Total miles traveled:Western Division: 800,000 milesPacific Division: 1,200,000 milesThe amount of risk improvement cost that should be allocatedto the Western Division is: (Do not round your intermediatecalculations.)a. $4,000,000.b. $3,200,000.c. $800,000.d. $5,333,333.

Step 1: Define Cost AllocationCost allocation is a technique used to assign a shared manufacturing…

Answered: The Western and Pacific Railroad has…

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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The Western and Pacific Railroad has two divisions, the Western Division and the Pacific Division. The company recently Invested $8,700,000 to maintain its rallroad track. Pertinent data for the two divisions are as follows: Total Miles Traveled: Western Division Pacific Division The amount of track Improvement cost that should be allocated to the Western Division is: Note: Round Intermediate calculations to 1 decimal place. Multiple Choice $550,633. $3,219,000. $536,500. 870,000 miles 1,500,000 miles $435,000.
Mace Manufacturing is in the process of analyzing its investment decision-making procedures. Two projects evaluated by the firm recently involved building new facilities in different regions, North and South. The basic variables surrounding each project analysis and the resulting decision actions are summarized in the following table: Basic variables North South Cost $7,000,000 $6,370,000 Life 12 years 12 years Expected return 7.8% 14.7% Least-cost financing Source Debt Equity Cost (after-tax) 5.1% 16.6% Decision Action Invest Don't invest Reason 7.8%>5.1% cost 14.7%<16.6% cost d. If the firm maintains a capital structure containing 40% debt and 60% equity, find its weighted average cost using the data in the table. e. If both analysts had used the weighted average cost calculated in part d, what recommendations would they have made regarding the…
Mace Manufacturing is in the process of analyzing its investment decision-making procedures. Two projects evaluated by the firm recently involved building new facilities in different regions, North and South. The basic variables surrounding each project analysis and the resulting decision actions are summarized in the following table: Basic variables North South Cost $7,000,000 $6,370,000 Life 12 years 12 years Expected return 7.8% 14.7% Least-cost financing Source Debt Equity Cost (after-tax) 5.1% 16.6% Decision Action Invest Don't invest Reason 7.8%>5.1% cost 14.7%<16.6% cost a. An analyst evaluating the North facility expects that the project will be financed by debt that costs the firm 5.1%. What recommendation do you think this analyst will make regarding the investment opportunity? b. Another analyst assigned to study the South facility believes that…
The estimate for the Gross Pointe project is: • market research: $2 million research & development: $5 million • initial investments: $25 million · Cost of salvage and removal: $1 million The project has not undertaken any of the above steps yet. What amount should be considered a SUNK cost? O $2 million $7 million $32 million none of the above is sunk cost--all are relevant costs
There are 4 different alternatives for a company investment project. Find out which project would be more suitable according to the technical data below.
Consider a project with the following information: Initial fixed asset investment = $540,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price = $52; variable costs = $33; fixed costs = $222,000; quantity sold = 112,000 units; tax rate = 21 percent. How sensitive is OCF to changes in quantity sold?
Laurman inc. is considering the following project: Please provide excel formulas for all answers
Consider a four-year project with the following information: Initial fixed asset investment = $575,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $29; variable costs = $19; fixed costs = $235,000; quantity sold = 76,000 units; tax rate = 21 percent. How sensitive is OCF to changes in quantity sold
Consider a three-year project with the following information: initial fixed asset investment = $710,000; straight-line depreciation to zero over the 5-year life; zero salvage value; price = $39.39; variable costs = $28.31; fixed costs = $332,000; quantity sold = 87,000 units; tax rate = 24 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) AOCF/AQ
An industrial organization studying the relative desirability of two diesel engines proposed for installation has estimated that the annual operating costs for engine A is Tk. 40,000 and for engine B is Tk. 35000. What is the added justifiable investment for engine B if the cost of money use is 8 percent of the investment, taxes are 4 percent of 80 percent of the first cost, insurance is 0.3 percent of investment, and annual depreciation charge has been set at 5 percent of the total investment?
Consider a project with the following information: Initial fixed asset investment = $550,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price $54; variable costs = $35; fixed costs = $228,000, quantity sold = 116,000 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) AOCFIAQ 9.24
An oil and gas company considers five sizes of pipe for a new pipeline. The costs for each size are provided below. Cash flow item Initial investment ($) Annual operating & maintenance cost (AOC) ($) Salvage value ($) Annual income ($) Lifetime, years 140 a) Payback period b) Rate of return (ROR) 3200 600 1000 1000 10 160 4000 950 1250 1500 10 Pipe size, mm c) Discounted profit to investment ratio (DPI) d) Annual worth criterion (AW) 200 5500 1000 1450 2000 10 240 6000 1150 700 2250 20 300 7500 1200 700 3250 If all pipes will last over the provided lifetimes and the company's minimum attractive rate of return (MARR) is 10%, which size of pipe would you choose according to the: 20

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