Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Kaminsky Ltd. operates a limestone quarry. It currently produces 94438 tons of low grade limestone rocks annually,wh1ch are sold at an average price of 30.76

image text in transcribed
Kaminsky Ltd. operates a limestone quarry. It currently produces 94438 tons of low grade limestone rocks annually,wh1ch are sold at an average price of 30.76 per ton. Kaminsky is considering the purchase of a pulverizer that can be used to crush these rocks into a powder that sells for 39.11 per ton. The pulverizer would cost 13348838 in annual depreciation and maintenance. To operate it would require hiring 3 employees at a cost of 57743 per year for each and a supervisor at a cost of 12954'l per year. Crushing 1000 tons of limestone consumes 830 of electricity. Insurance, permits, taxes, and paperwork would cost an additional 22600? per year. Kaminsky has space on its quarry site that is currently unused that could be employed as the site of the pulvetizing operation. The space constitutes 3% of the quarry's area. The quarry itself is leased at an annual cost of 3 million. Kaminsky spends 20442\" to excavate the 94438 tons of rock, and all 94438 tons would be crushed into powder if the company buys the pulverizer. lfthe pulverizer is not built Kaminsky has alternative plans for the unused space that would produce 40,000 in annual prot. What is Kaminskys annual differential prot from buying the pulverizer? [You can round to the pound and the answer can be positive or negative.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cambridge IGCSE And O Level Accounting Coursebook

Authors: Catherine Coucom

2nd Edition

1316502775, 978-1316502778

More Books

Students also viewed these Accounting questions