Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas's contractspecifies that it will receive a flat fee of $60,000 and an additional $30,000 if Bran reaches a prespecified target amount of costsavings. Thomas estimates that there is a 25% chance that Bran will achieve the cost-savings target.Required:1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transaction price.2. Assuming Thomas uses the most likely value as its estimate of variable consideration, calculate the transaction price.3. Assume Thomas uses the expected value as its estimate of variable consideration, but is very uncertain of that estimate due to alack of experience with similar consulting arrangements. Calculate the transaction price.1. Using expected value2. Using most likely value3. Using expected value but uncertainTransaction Price

Note : When the chance of occurring an event is more than 50% , then the situation is considered as…

Answered: Thomas Consultants provided Bran…

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 technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Martin Enterprises needs someone to supply it with 155,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost $1,950,000 to install the equipment necessary to start production; you'll depreciate this cost straight-line to zero over the project's life. You estimate that, in five years, this equipment can be salvaged for $165,000. Your fixed production costs will be $280,000 per year, and your variable production costs should be $10.90 per carton. You also need an initial investment in net working capital of $145,000. The tax rate is 25 percent and you require a return of 14 percent on your investment. Assume that the price per carton is $17.50.…
19) Hopner Products enters into a contract with Tulles to sell three different products. The total transaction price is $370,000. Each of the products is a separate performance obligation. Based on the information presented in the table, what is the allocated transaction price of product Z using the expected-cost-plus-a-profit margin approach? (Round intermediary percentages to the nearest hundredth percent, and round your final answer to the nearest whole number.) Product X Y Z A) $159,390 B) $94,868 C) $123,333 D) $185,000 Standalone Price $150,000 $110,000 Not Available Market Price Forecasted Cost $130,000 $100,000 $160,000 $85,000 $100,000 $140,000
Can you help with attached question, thank you in advance.
Morton and Moore LLC (M²) is trying to decide between two machines that are necessary in its manufacturing facility. If M² has a MARR of 10%, which of the following machines should be chosen? Hint: Minimize EUAC. Machine A Machine B 6- 28 620 First cost $45,000 $24,000 Annual operating costs 31,000 35,000 Overhaul in Years 2 and 4 6,000 Overhaul in Year 5 12,000 Salvage value 10,000 8,000 Useful life 8 years 6 years 1 Ne Ac Ca Ca EM Ye Co Pr Ri Vi Ge Lit Ra Ne An Pr Sa Sc Be
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.50 per switch. Vista's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Annual fixed costs Variable cost per switch Machine A $632,400 1.78 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 235,000 switches per year and what is the total cost of that alternative? Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Machine B $ 860,100 0.80 Minimum number of switches For each machine, what is the minimum number of switches that…
Urmila ben
Management of Sandhill Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a cost of $312,500. They project that the cash flows from this investment will be $113,000 for the next seven years. If the appropriate discount rate is 14 percent, what is the NPV for the project? (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.) NPV=
The company you work for is evaluating projects to upgrade their information management systems. Two projects under consideration are an upgrade of the account management system with an IRR of 8% and an upgrade of the resource management system with an IRR of 5%. If the discount rate is actually 6%, which project should the company undertake?

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