Blue Fish Corporation is preparing its budget for the coming year, 2022. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process. Blue Fish Corporation Income Statement For the year ended December 31, 2021 Sales Cost of Goods Sold Gross project Selling and Administrative Expenses Income from Operations Interest Expense Income Before Taxes Income Tax Expense Net Income Direct Materials Sales Unit sales for November 2021 Unit sales for December 2021 Expected unit sales for January 2022 Expected unit sales for February 2022 16,662,000 5,980,904 10,681,096 7,386,000 3,295,096 111,020 Manufacturing Overhead 3,184,076 668,656 2,515,420 Indirect materials Indirect labor Utilities Maintenance Salaries Advertising Insurance Salaries Depreciation Other fixed costs 115,000 100,500 114,500 116,200 35 per labor hour 60 per labor hour 55 per labor hour 35 per labor hour $49,000 per month Blue Fish Corporation Balance Sheet December 31, 2021 Selling and Administrative Variable selling and administrative cost per unit is $1.82 Cash Accounts Receivable, net Raw Materials Inventory Finished Goods Inventory $13,500 a month $1,375 a month $76,000 a month $2,300 a month $3,100 a month Machinery and equipment, net Total Assets. Labor requires 9 minutes per unit for completion and is paid at $13 per hour. Accounts Payable Income Taxes Payable Total Liabilities Common Stock Retained earnings Blue Fish likes to keep 15% of the next month's unit sales in ending inventory. All sales are on account. 80% of the Accounts Receivable are collected in the month of sale, and 20% of the Accounts Receivable are collected in the month after sale. Total liabilities and Stockholder's equity Direct materials cost 82 cents per pound. 2.5 pounds of direct materials are required to produce each unit. Blue Fish likes to keep 10% of the materials needed for the next month in its ending inventory. Raw Materials on December 31, 2021, totaled 18,800 pounds. Payment for materials is made within 15 days. 60% is paid in the month of purchase, and 40% is paid in the month after purchase. There was no beginning or ending work-in- process inventory for the 1st quarter. Direct Labor 93,000 198,300 15,416 91,838 920,000 1,318,554 106,885 668,656 775,541 250,000 293,013 Expected unit sales for March 2022 Expected unit sales for April 2022 Expected unit sales for May 2022 Unit selling price Depreciation Property taxes Insurance Maintenance 1,318,554 117,100 126,800 135,300 $13 $16,200 per month $2,300 per month $1,450 per month $1,525 per month q) Calculate the total overhead variance for the first quarter of 2022 assuming the company had actual Variable Overhead of $102,800 and actual fixed overhead of $185,000. The company actually produced 298,900 Units during the quarter with a predetermined overhead rate of $5.90 per direct labor hour. r) The company is trying to decide between 3 new pieces of equipment. All three will last the company for 5 years. The company's cost of capital is 12%. The information is as follows. a. Machine A has a cost of $175,000 with a salvage value of $5,000 at the end of the 5 years. This machine will need a new overhaul at the end of year 3 for $10,000. It is expected to produce net income over the next 5 years of $20,000 per year. b. Machine B will cost $190,000 with no salvage value. This machine is expected to product net income of $29,000 (year 1), $26,000 (year 2), $24,000(year 3), $19,000(year 4), and $8,000(year 5), over the next 5 years. c. Machine C will cost $140,000 with a salvage value of $10,000 at the end of year 5. This machine will need a new overhaul at the end of year 2 for $15,000. It is expected to produce net income over the next 5 years of $24,000 per year. Calculate the Net Present Value, Rate of Return and Payback Period for each of the 3 machines and make a recommendation to the manager on which machine would be best for the company.