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At the beginning of the question, Ignore the degit 2 and the word later. Begin the question with, The company... 2. Later, the company is
At the beginning of the question, Ignore the degit 2 and the word later. Begin the question with, The company...
2. Later, the company is considering the purchase of machinery and equipment to set up a line to produce a combination washer-dryer. They have given you the following information to analyze the project on a 5-year timeline: Initial cash outlay is $150,000, no residual value. Sales price is expected to be $2,250 per unit, with $595 per unit in labor expense and $795 per unit in materials. Direct fixed costs are estimated to run $20,750 per month. Cost of capital is 8%, and the required rate of return is 10%. They will incur all operational costs in Year 1, though sales are expected to be 55% of break- even. Break-even (considering only direct fixed costs) is expected to occur in Year 2. Variable costs will increase 2% each year, starting in Year 3. Sales are estimated to grow by 10%, 15%, and 20% for years 3 - 5. They have asked you to calculate: The product's contribution margin Break-even quantity NPV IRR Once you have determined these amounts, they have asked that you present the information, describe how you performed your calculations, and explain what the results mean. After you have completed the calculations and presented your work, management makes the investment. Explain how the project analyses do or do not support this decision. In either case, what are the factors that should have been considered in management's decision? For this activity, you have been hired as a team of consultants on a multi-year basis for a global washer and dryer manufacturer. They currently offer two core washer and dryer sets: a high-end model and an economic model. You are tasked to complete several calculations and present your findings to the company stakeholders. You may use any presentation software (Google Slides, Prezi, PowerPoint, etc.) and your completed presentation should consist of 8 - 12 slides. A copy of the final presentation will be submitted by each member of the group in Unit 7. 1. For your first assignment, management has provided the following revenue and cost information: Economical High- End Set Set per per Sales price $3,500 $1,000 unit unit per per Labor $875 $250 unit unit per per Materials $1400 $300 unit unit Direct fixed per per $25,000 month $16,500 costs month Allocated fixed per per $85,000 month $85,000 costs month They want a better understanding of their business to make budgeting and sales goals decisions and have asked you to determine their: 1. 1. Contribution Margins for each product line 2. Break-even quantities for each product line 3. Break-even quantities to earn $500,000 per year margin on the high-end line (at the current sales price) 4. Break-even quantities to earn $300,000 per year margin on the economical line (at the current sales price) They expect the product lines to fully absorb the costs allocated to them. They have also asked that you show each step in your calculations so that they can understand your analysis. (Note: you will be graded on your intermediary values.) Once you have determined these amounts, they have asked that you: . present the information describe how you performed your calculations and explain what the results mean 2. Later, the company is considering the purchase of 2. Later, the company is considering the purchase of machinery and equipment to set up a line to produce a combination washer-dryer. They have given you the following information to analyze the project on a 5-year timeline: Initial cash outlay is $150,000, no residual value. Sales price is expected to be $2,250 per unit, with $595 per unit in labor expense and $795 per unit in materials. Direct fixed costs are estimated to run $20,750 per month. Cost of capital is 8%, and the required rate of return is 10%. They will incur all operational costs in Year 1, though sales are expected to be 55% of break- even. Break-even (considering only direct fixed costs) is expected to occur in Year 2. Variable costs will increase 2% each year, starting in Year 3. Sales are estimated to grow by 10%, 15%, and 20% for years 3 - 5. They have asked you to calculate: The product's contribution margin Break-even quantity NPV IRR Once you have determined these amounts, they have asked that you present the information, describe how you performed your calculations, and explain what the results mean. After you have completed the calculations and presented your work, management makes the investment. Explain how the project analyses do or do not support this decision. In either case, what are the factors that should have been considered in management's decision? For this activity, you have been hired as a team of consultants on a multi-year basis for a global washer and dryer manufacturer. They currently offer two core washer and dryer sets: a high-end model and an economic model. You are tasked to complete several calculations and present your findings to the company stakeholders. You may use any presentation software (Google Slides, Prezi, PowerPoint, etc.) and your completed presentation should consist of 8 - 12 slides. A copy of the final presentation will be submitted by each member of the group in Unit 7. 1. For your first assignment, management has provided the following revenue and cost information: Economical High- End Set Set per per Sales price $3,500 $1,000 unit unit per per Labor $875 $250 unit unit per per Materials $1400 $300 unit unit Direct fixed per per $25,000 month $16,500 costs month Allocated fixed per per $85,000 month $85,000 costs month They want a better understanding of their business to make budgeting and sales goals decisions and have asked you to determine their: 1. 1. Contribution Margins for each product line 2. Break-even quantities for each product line 3. Break-even quantities to earn $500,000 per year margin on the high-end line (at the current sales price) 4. Break-even quantities to earn $300,000 per year margin on the economical line (at the current sales price) They expect the product lines to fully absorb the costs allocated to them. They have also asked that you show each step in your calculations so that they can understand your analysis. (Note: you will be graded on your intermediary values.) Once you have determined these amounts, they have asked that you: . present the information describe how you performed your calculations and explain what the results mean 2. Later, the company is considering the purchase of
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