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Problem 6-2 Calculating Project NPV The Best Manufacturing Company Is Considering A New Investment. Financial Projections For The Investment Are Tabulated Here. The Corporate Tax Rate Is 40 Percent. Assume All Sales Revenue Is Received In
Problem 6-2 Calculating Project NPV
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| The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 40 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. |
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | ||||||
| Investment | $ | 26,000 | ||||||||
| Sales revenue | $ | 13,500 | $ | 14,000 | $ | 14,500 | $ | 11,500 | ||
| Operating costs | 2,900 | 3,000 | 3,100 | 2,300 | ||||||
| Depreciation | 6,500 | 6,500 | 6,500 | 6,500 | ||||||
| Net working capital spending | 320 | 370 | 420 | 320 | ? | |||||
| a. | Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) |
| Year 1 | Year 2 | Year 3 | Year 4 | |
| Net income | $ [removed] | $ [removed] | $ [removed] | $ [removed] |
| b. | Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations.Negative amounts should be indicated by a minus sign.) |
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
| Cash flow | $ [removed] | $ [removed] | $ [removed] | $ [removed] | $ [removed] |
| c. | Suppose the appropriate discount rate is 11 percent. What is the NPV of the project? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
| NPV |
Problem 6-7 Project Evaluation
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| Dog Up! Franks is looking at a new sausage system with an installed cost of $495,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $73,000. The sausage system will save the firm $175,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $32,000. If the tax rate is 34 percent and the discount rate is 10 percent, what is the NPV of this project? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
| NPV | $ [removed] |
Problem 6-8 Calculating Salvage Value
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| An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $6,190,000 and will be sold for $1,390,000 at the end of the project. If the tax rate is 35 percent, what is the aftertax salvage value of the asset? Refer to MACRS schedule(Do not round intermediate calculationsand round your answer to 2 decimal places. Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) |
| Aftertax salvage value | $ [removed] |
Problem 6-9 Calculating NPV
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| Howell Petroleum is considering a new project that complements its existing business. The machine required for the project costs $3.88 million. The marketing department predicts that sales related to the project will be $2.58 million per year for the next four years, after which the market will cease to exist. The machine will be depreciated down to zero over its four-year economic life using the straight-line method. Cost of goods sold and operating expenses related to the project are predicted to be 20 percent of sales. Howell also needs to add net working capital of $230,000 immediately. The additional net working capital will be recovered in full at the end of the project’s life. The corporate tax rate is 34 percent. The required rate of return for Howell is 15 percent. |
| What is the value of the NPV for this project? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
| Problem 6-11 Cost-Cutting ProposalsMassey Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $540,000 is estimated to result in $225,000 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a salvage value at the end of the project of $91,000. The press also requires an initial investment in spare parts inventory of $27,000, along with an additional $3,200 in inventory for each succeeding year of the project. The shop’s tax rate is 30 percent and its discount rate is 8 percent. Refer to MACRS schedule. |
| Calculate the NPV of this project. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
| NPV | $ [removed] |
ACCT 2402 Introduction To Mangerial Accounting: Fall
value:
10.00 points
Foundational 7-1
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,400, 15,000, 17,000, and 18,000 units, respectively. All sales are on credit. |
| (b) | Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month. |
| (c) | The ending finished goods inventory equals 30% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound. |
| (e) | Thirty-percent of raw materials purchases are paid for in the month of purchase and 70% in the following month. |
| (f) | The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $65,000. |
| What are the budgeted sales for July? |
| Budgeted sales | $ [removed] |
2.
value:
10.00 points
Foundational 7-2
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,900, 30,000, 32,000, and 33,000 units, respectively. All sales are on credit. |
| (b) | Forty-percent of credit sales are collected in the month of the sale and 60% in the following month. |
| (c) | The ending finished goods inventory equals 30% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound. |
| (e) | Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month. |
| (f) | The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $69,000. |
| What are the expected cash collections for July? |
| Total cash collections | $ [removed] |
3.
value:
10.00 points
Foundational 7-3
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 8,600, 17,000, 19,000, and 20,000 units, respectively. All sales are on credit. |
| (b) | Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month. |
| (c) | The ending finished goods inventory equals 25% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.40 per pound. |
| (e) | Thirty five-percent of raw materials purchases are paid for in the month of purchase and 65% in the following month. |
| (f) | The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $67,000. |
| What is the accounts receivable balance at the end of July? |
| Accounts receivable | $ |
4.
value:
10.00 points
Foundational 7-4
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,500, 26,000, 28,000, and 29,000 units, respectively. All sales are on credit. |
| (b) | Forty-percent of credit sales are collected in the month of the sale and 60% in the following month. |
| (c) | The ending finished goods inventory equals 25% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 15% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.40 per pound. |
| (e) | Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month. |
| (f) | The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.50. The fixed selling and administrative expense per month is $65,000. |
| According to the production budget, how many units should be produced in July? |
| Required production | [removed] units |
5.
value:
10.00 points
Foundational 7-5
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,300, 24,000, 26,000, and 27,000 units, respectively. All sales are on credit. |
| (b) | Forty-percent of credit sales are collected in the month of the sale and 60% in the following month. |
| (c) | The ending finished goods inventory equals 30% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound. |
| (e) | Thirty-percent of raw materials purchases are paid for in the month of purchase and 70% in the following month. |
| (f) | The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $63,000. |
| If 105,200 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July? |
| Raw materials to be purchased | [removed] pounds |
6.
value:
10.00 points
Foundational 7-6
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,500, 26,000, 28,000, and 29,000 units, respectively. All sales are on credit. |
| (b) | Forty-percent of credit sales are collected in the month of the sale and 60% in the following month. |
| (c) | The ending finished goods inventory equals 25% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 15% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.40 per pound. |
| (e) | Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month. |
| (f) | The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.50. The fixed selling and administrative expense per month is $65,000. |
| What is the estimated cost of raw materials purchases for July? |
| Cost of raw material purchases | $ |
7.
value:
10.00 points
Foundational 7-7
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,200, 13,000, 15,000, and 16,000 units, respectively. All sales are on credit. |
| (b) | Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month. |
| (c) | The ending finished goods inventory equals 20% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound. |
| (e) | Thirty-percent of raw materials purchases are paid for in the month of purchase and 70% in the following month. |
| (f) | The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.40. The fixed selling and administrative expense per month is $63,000. |
| If the cost of raw materials purchases in June is $119,800, what are the estimated cash disbursements for raw materials purchases in July? |
| Total cash disbursements | $ [removed] |
8.
value:
10.00 points
Foundational 7-8
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,800, 19,000, 21,000, and 22,000 units, respectively. All sales are on credit. |
| (b) | Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month. |
| (c) | The ending finished goods inventory equals 20% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.40 per pound. |
| (e) | Twenty five-percent of raw materials purchases are paid for in the month of purchase and 75% in the following month. |
| (f) | The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $2.00. The fixed selling and administrative expense per month is $69,000. |
| What is the estimated accounts payable balance at the end of July? |
| Accounts payable | $ [removed] |
9.
value:
10.00 points
Foundational 7-9
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,400, 15,000, 17,000, and 18,000 units, respectively. All sales are on credit. |
| (b) | Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month. |
| (c) | The ending finished goods inventory equals 30% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound. |
| (e) | Thirty-percent of raw materials purchases are paid for in the month of purchase and 70% in the following month. |
| (f) | The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $65,000. |
| What is the estimated raw materials inventory balance at the end of July? |
| Raw material inventory balance | $ |
10.
value:
10.00 points
Foundational 7-10
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 9,100, 22,000, 24,000, and 25,000 units, respectively. All sales are on credit. |
| (b) | Forty-percent of credit sales are collected in the month of the sale and 60% in the following month. |
| (c) | The ending finished goods inventory equals 20% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound. |
| (e) | Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month. |
| (f) | The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $61,000. |
| What is the total estimated direct labor cost for July assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced? |
| Total direct labor cost | $ [removed] |
11.
value:
10.00 points
Foundational 7-11
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 9,100, 22,000, 24,000, and 25,000 units, respectively. All sales are on credit. |
| (b) | Forty-percent of credit sales are collected in the month of the sale and 60% in the following month. |
| (c) | The ending finished goods inventory equals 20% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound. |
| (e) | Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month. |
| (f) | The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $61,000. |
| If the company always uses an estimated predetermined plantwide overhead rate of $12 per direct labor-hour, what is the estimated unit product cost? (Round your answer to 2 decimal places.) |
| Unit product cost | $ [removed] |
2.
value:
10.00 points
Foundational 7-12
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 8,300, 14,000, 16,000, and 17,000 units, respectively. All sales are on credit. |
| (b) | Forty-percent of credit sales are collected in the month of the sale and 60% in the following month. |
| (c) | The ending finished goods inventory equals 25% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 per pound. |
| (e) | Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month. |
| (f) | The direct labor wage rate is $15 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.50. The fixed selling and administrative expense per month is $64,000. |
| What is the estimated finished goods inventory balance at the end of July, if the company always uses an estimated predetermined plantwide overhead rate of $6 per direct labor-hour? |
| Ending finished goods inventory | $ [removed] |
13.
value:
10.00 points
Foundational 7-13
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,000, 21,000, 23,000, and 24,000 units, respectively. All sales are on credit. |
| (b) | Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month. |
| (c) | The ending finished goods inventory equals 30% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.70 per pound. |
| (e) | Twenty-percent of raw materials purchases are paid for in the month of purchase and 80% in the following month. |
| (f) | The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $60,000. |
| What is the estimated cost of goods sold and gross margin for July, if the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour? |
| Estimated cost of goods sold | $ | [removed] |
| Estimated gross margin | $ | [removed] |
14.
value:
10.00 points
Foundational 7-14
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 8,900, 20,000, 22,000, and 23,000 units, respectively. All sales are on credit. |
| (b) | Forty-percent of credit sales are collected in the month of the sale and 60% in the following month. |
| (c) | The ending finished goods inventory equals 20% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound. |
| (e) | Thirty-percent of raw materials purchases are paid for in the month of purchase and 70% in the following month. |
| (f) | The direct labor wage rate is $13 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.50. The fixed selling and administrative expense per month is $70,000. |
| What is the estimated total selling and administrative expense for July? |
| Total selling and administrative expenses | $ [removed] |
check my workreferencesebook & resources
15.
value:
10.00 points
Foundational 7-15
| Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: |
| (a) | The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,600, 27,000, 29,000, and 30,000 units, respectively. All sales are on credit. |
| (b) | Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month. |
| (c) | The ending finished goods inventory equals 30% of the following month’s unit sales. |
| (d) | The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound. |
| (e) | Twenty five-percent of raw materials purchases are paid for in the month of purchase and 75% in the following month. |
| (f) | The direct labor wage rate is $13 per hour. Each unit of finished goods requires two direct labor-hours. |
| (g) | The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $66,000. |
| What is the estimated net operating income for July, if the company always uses an estimated predetermined plantwide overhead rate of $9 per direct labor-hour? |
| Net operating income | $ [removed] |
Government Role And Trading Blocks
Assignment 1: Discussion—Government Role and Trading Blocks
Please answer all questions
While there are powerful economic arguments for international trade, countries do impose restrictions on international trade. At the same time, regional agreements form one method to reduce or eliminate such restrictions among countries signing the agreement.
Research government role in trade and trade agreements using your textbook, University online library resources, and the Internet. Respond to the following:
- Should governments promote or restrict international trade? Describe at least three ways in which countries can restrict trade. Irrespective of your answer, which position—promoting or restricting international trade—is most likely to find support as a national strategy? Why do governments commonly initiate policies that support both positions?
- Research one regional trading bloc of which the United States is a member. Describe when the bloc was constituted, which countries are currently members, and which products are included in agreements. What is the economic justification for this trade bloc? Do you agree with the U.S. involvement in this trading bloc? What does the U.S. gain or lose?
Write your response in 400 words or less. Apply current APA standards for writing style to your work. All written assignments and responses should follow APA rules for attributing sources.
By Thursday, January 24, 2013, submit your assignment
Assignment 2: Case Analysis—Google in China
Governments play an important role in business decisions and business operations. The case study in this assignment provides a fascinating view of the business environment in China.
Read the following case study:
Analyze the case. In your case analysis, address the following questions:
- What is the basic situation described in the case? Summarize the Google experience.
- What other companies are described in the case as having had to deal with Chinese censorship. What is your opinion of their actions?
- What seems to be the policy of Chinese censorship?
- What are some U.S. congressional initiatives related to Chinese censorship? Do you support those initiatives?
- Did Google make the right choice? What were the different opinions expressed in the case regarding the Google choice? Form an argument.
Submit your work in a 3-page Word document. Apply current APA standards for writing style to your work. All written assignments and responses should follow APA rules for attributing sources.