Use the following to answer questions 76-79:(Ignore income taxes in this problem.) Perky Food Corporation produces and sells coffeejelly. Perky currently produces the jelly using a manual operation but is considering thepurchase of machinery to automate its operations. Information related to the two operations isas follows:Cost of machinery.Useful life of machinery.Expected salvage value in 12 years.Expected annual revenue (50,000 jars)..Expected annual variable costs.Expected annual fixed costs.*****B) 12.1%C) 14.5%D) 22.9%ManualOperation$210,000$42,000$72,000Perky's discount rate is 12%. Perky uses the straight-line method of depreciation.76. What is the net present value of automating operations using the incremental costapproach?Answer: A Level: Medium LO: 6AutomatedOperation$420,000$210,000$135,000$30,00012 years$0A) $11,940B) $56,940C) $(104,106)D) $112,684Answer: C Level: Medium LO: 177. Within what range does the internal rate of return fall?A) 6% to 8%B) 10% to 12%C) 12% to 14%D) 18% to 20%Answer: A Level: Medium LO: 278. What is the simple rate of return for automating operations?A) 3.8%

Simple Rate of Return=Net incomeCost of investment×100

Use the following to answer questions 76-79: (Ignore income taxes in this problem.) Perky Food Corporation produces and sells coffee jelly. Perky currently produces the jelly using a manual operation but is considering the purchase of machinery to automate its operations. Information related to the two operations is as follows: Cost of machinery. Useful life of machinery.. Expected salvage value in 12 years... Expected annual revenue (50,000 jars).. Expected annual variable costs. $210,000 $42,000 Expected annual fixed costs. $72,000 Perky's discount rate is 12%. Perky uses the straight-line method of depreciation. 76. What is the net present value of automating operations using the incremental cost approach? ***** **** Manual Automated Operation Operation $420,000 $210,000 $135,000 $30,000 A) $11,940 B) $56,940 C) $(104,106) D) $112,684 Answer: C Level: Medium LO: 1 77. Within what range does the internal rate of return fall? A) 6% to 8% B) 10% to 12% C) 14.5% D) 22.9% Answer: A Level: Medium LO: 6 12 years $0 C) 12% to 14% D) 18% to 20% Answer: A Level: Medium LO: 2 78. What is the simple rate of return for automating operations? A) 3.8% B) 12.1%

Use the following to answer questions 76-79: (Ignore income taxes in this problem.) Perky Food Corporation produces and sells coffee jelly. Perky currently produces the jelly using a manual operation but is considering the purchase of machinery to automate its operations. Information related to the two operations is as follows: Cost of machinery. Useful life of machinery.. Expected salvage value in 12 years... Expected annual revenue (50,000 jars).. Expected annual variable costs. $210,000 $42,000 Expected annual fixed costs. $72,000 Perky's discount rate is 12%. Perky uses the straight-line method of depreciation. 76. What is the net present value of automating operations using the incremental cost approach? * Manual Automated Operation Operation $420,000 $210,000 $135,000 $30,000 A) $11,940 B) $56,940 C) $(104,106) D) $112,684 Answer: C Level: Medium LO: 1 77. Within what range does the internal rate of return fall? A) 6% to 8% B) 10% to 12% C) 14.5% D) 22.9% Answer: A Level: Medium LO: 6 12 years $0 C) 12% to 14% D) 18% to 20% Answer: A Level: Medium LO: 2 78. What is the simple rate of return for automating operations? A) 3.8% B) 12.1%

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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Elroy Racers makes bicycles. It has always purchased its bicycle tires from the M. Wilson Tires at $25 each but is currently considering making the tires in its own factory. The estimated costs per unit of making the tires are as follows: Direct materials $8 Direct labor $5 Variable manufacturing overhead $7 The company’s fixed expenses would increase by $60,000 per year if managers decided to make the tire.(b)What qualitative factors should Elroy Racers consider in making this decision?
Answer the following questions. A company has an inventory of 1,350 assorted parts for a line of missiles that has been discontinued. The inventory cost is $76,000. The parts can be either (a) remachined at total additional costs of $27,500 and then sold for $33,000 or (b) sold as scrap for $4,000. Which action is more profitable? Show your calculations. A truck, costing $101,500 and uninsured, is wrecked its first day in use. It can be either (a) disposed of for $15,500 cash and replaced with a similar truck costing $102,000 or (b) rebuilt for $82,000, and thus be brand-new as far as operating characteristics and looks are concerned. Which action is less costly? Show your calculations. 1. 2. 1. A company has an inventory of 1,350 assorted parts for a line of missiles that has been discontinued. The inventory cost is $76,000. The parts can be either (a) remachined t total additional costs of $27,500 and then sold for $33,000 or (b) sold as scrap for $4,000. Which action is more…
Sheridan Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $480,000. variable expenses of $363,000, and fixed expenses of $144,000. Therefore, the gloves and mittens line had a net loss of $27,000. If Sheridan eliminates the line, $36,000 of fixed costs will remain. Prepare an analysis showing whether the company should eliminate the gloves and mittens line. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45))
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Cox Electric makes electronic components and has estimated the following for a new design of one of its products. Fixed cost = $23,750 • Material cost per unit = $0.17 • Labor cost per unit = $0.11 • Revenue per unit = $0.66 Note that fixed cost is incurred regardless of the amount produced. Per-unit material and labor cost together make up the variable cost per unit. Assuming that Cox Electric sells all that it produces, profit is calculated by subtracting the fixed cost and total variable cost from total revenue. Construct an appropriate spreadsheet model to find the profit based on a given production level and use the spreadsheet model to answer these questions. (a) Construct a one-way data table with production volume as the column input and profit as the output. Breakeven occurs when profit goes from a negative to a positive value; that is, breakeven is when total revenue = the total cost, yielding a profit of zero. Vary production volume from 0 to 100,000 in increments of 10,000.…
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