5. Machine Replacement Decision
6. Sell or process further
7. Adopting a Business at a Special Price
8. Product cost method of product pricing
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $602,400 and has $350,800 of accumulated depreciation to date, with a new machine that has a purchase price of $484,500. The old machine could be sold for $61,400. The annual variable production costs associated with the ol machine are estimated to be $158,100 per year for eight years. The annual variable production costs for the new machine are estimated to be $101,30 per year for eight years. a.1 Prepare a differential analysis dated May 29 to determine whether to continue with (Alternative 1) or replace (alternative 2) the old machine. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 29 Continue Replace with Old old Differential Machine Machine Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues Proceeds from sale of old machine Costs: Purchase price Variable productions costs (8 years) Profit (Loss 3.2 Determine whether to continue with Alternative 1) or replace (Alternative 2) the old machine . Prerna y zuecome WIES WITH TOO TI amount is zero, enter "o". If required, use a minus sign to indicate a loss. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 29 Continue Replace with old old Differential Machine Machine Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues: Proceeds from sale of old machine Costs: Purchase price Variable productions costs (8 years) Profit (Loss) 0.2 Determine whether to continue with Alternative 1) or replace Alternative 23 the old machine b. What is the sunk cost in this situation? The sun cost is Sell or Process Further Calgary Lumber Company incurs a cost of $376 per hundred board feet (hbf) in processing certain "rough-cut" lumber, which it sells for $560 per hhf. An alternative is to produce a "finished-cut" at a total processing cost of $527 per hbt, which can be sold for $774 per hbt. a. Prepare a differential analysis dated March 15 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). Differential Analysis Sell Rough-Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2) March 15 Sell Process Further Differential Rough-Cut into Finished-Cut Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues, per 100 board ft. Costs, por 100 board ft. 8 Prolit (Loss), per 100 board to b. Determine whether to sell rough cut lumber (Alternative 1) or process further into finished-cut lumber Alternative 2) Sell rough-cut lumber Process further and sell finished.cut lumber eBook Print Item Accepting Business at a Special Price Power Serve Company expects to operate at 85% of productive capacity during May. The total manufacturing costs for May for the production of 28,050 batteries are budgeted as follows: Direct materials $280,400 Direct labor 103,100 Variable factory overhead 28,835 Fixed factory overhead Total manufacturing costs $470,335 The company has an opportunity to submit a bid for 2,000 batteries to be delivered by May 31 to a government agency. If the contract is obtained, it is anticipated that the additional activity will not interfere with normal production during May or increase the selling or administrative expenses. What is the unit cost below which Power Serve Company should not go in bidding on the government contract? Round your answer to two decimal 58,000 places per unit SHOW ME How Print Item Product Cost Method of Product Pricing La Femme Accessories Inc. produces women's handbags. The cost of producing 800 handbags is as follows: Direct materials $18,000 Direct labor 8,500 Factory overhead 5,500 Total manufacturing cost $32,000 The selling and administrative expenses are $17,000. The management desires a profit equal to 22% of invested assets of $250,000 a. Determine the amount of desired profit from the production and sale of 800 handbags b. Determine the product cost per unit for the production of 800 handbags c. Determine the product cost markup percentage for handbags d. Determine the selling price of handbags Cost per unit Markup per unit Selling price per unit
