Case 10 - Word galdo gaspar GG a File Home Insert Draw References Mailings Review View Help Tell me what you want to do Share Find Design Layout Calibri (Bady) 011 A A Aav BI Unhe X, XA A & Cut copy Paste Format Painter Clipboard E... ** 41 AaBbCcDc AaBbCcDc AaBbcc AaBbccc AaB 1 Normal 1 No Spac... Heading 1 Heading 2 Title hy abc Replace Select Font Paragraph Styles Editing TOPIC - COST ANALYSIS Case 10 Cost Structure and Risk Glendale Company makes a number of products and uses a great deal of machinery. A new product this coming year will require the acquisition of a new machine. The machine can only be leased, not purchased. There are two alternative leasing arrangements: 1) a month-to-month lease that can be cancelled on 30-day notice by either Glendale or the lessor, at a monthly rental of P6,000, and 2) a five-year non- cancelable lease at P5,200 per month. The new product is expected to have a life of five years, during which annual revenues will be P250,000 and annual variable costs of P100,000. There are no new fixed costs other than the lease payments. The President is concerned that the five-year lease removes a great deal of flexibility; if the product does not pan out as expected, the company is stuck with the machine and there are no other uses of it. I le does, however, like the deal of saving P800 per month. Required: Why would the president hesitate between the choices? What could happen to make him regret choosing (a) the month-to-month lease? (b) the five-year lease? Present analysis. Page 1 of 1 O words E English (United Kingdom) ( 130% w ENG UK 8:33 PM 10/31/2021 Case 10 - Word galdo gaspar GG a File Home Insert Draw References Mailings Review View Help Tell me what you want to do Share Find Design Layout Calibri (Bady) 011 A A Aav BI Unhe X, XA A & Cut copy Paste Format Painter Clipboard E... ** 41 AaBbCcDc AaBbCcDc AaBbcc AaBbccc AaB 1 Normal 1 No Spac... Heading 1 Heading 2 Title hy abc Replace Select Font Paragraph Styles Editing TOPIC - COST ANALYSIS Case 10 Cost Structure and Risk Glendale Company makes a number of products and uses a great deal of machinery. A new product this coming year will require the acquisition of a new machine. The machine can only be leased, not purchased. There are two alternative leasing arrangements: 1) a month-to-month lease that can be cancelled on 30-day notice by either Glendale or the lessor, at a monthly rental of P6,000, and 2) a five-year non- cancelable lease at P5,200 per month. The new product is expected to have a life of five years, during which annual revenues will be P250,000 and annual variable costs of P100,000. There are no new fixed costs other than the lease payments. The President is concerned that the five-year lease removes a great deal of flexibility; if the product does not pan out as expected, the company is stuck with the machine and there are no other uses of it. I le does, however, like the deal of saving P800 per month. Required: Why would the president hesitate between the choices? What could happen to make him regret choosing (a) the month-to-month lease? (b) the five-year lease? Present analysis. Page 1 of 1 O words E English (United Kingdom) ( 130% w ENG UK 8:33 PM 10/31/2021