Need help with c and d in the below problem. The attachment has calculations for a & b. Would like answer with calculations in excel so that i can understand how they were done. Thanks much :)

Based on Chapter 5's exercise 5
ABC's Product information
Current Product	Expansion Product (estimate)
Selling Price	$14.50	?
Units produced and expected to be sold	80,000	5,000
Machine Hours	40,000	5,000
Direct Materials	$1.30 per unit	$5.60	per unit
Direct labor dollars needed per product	$2.80 per unit	$4.00	per unit
Variable Factory Overhead	$1.00 per Machine Hour	$1.00	per Machine Hour
Variable Selling Expense	$0.20 per unit	$0.20	per unit
Total Fixed Costs:
Fixed Factory Overhead	$ 198,000
Fixed Selling expenses	$ 191,250
III. Product cost: ABC Company believes that it has an additional 5,000 machine hours available in the current facility before it would need to expand. ABC Company uses machine hours to allocate the fixed factory overhead, and units sold to allocate the fixed sales expenses. Bases on current research, ABC Company expects that it will take twice as long to produce the expansion product as it currently takes to produce its existing product.
a. What is the product cost for the expansion product under absorption and variable costing?
b. By adding this new expansion product, it helps to absorb the fixed factory and sales expenses. How much cheaper does this expansion make the existing product?
c. Assuming ABC Company wants a 40% gross margin for the new product, what selling price should it set for the expansion product?
d. Assuming the same sales mix of these two products, what are the contribution margins and break-even points by product?

You've just been hired onto ABC Company as the corporate controller. ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles. The company currently has annual sales of around $1.2 million, a 25% increase from the previous year. The company has an aggressive growth target of reaching $3 million annual sales within the next 3 years. The CEO has been trying to find additional products that can leverage the current ABC employee skillset as well as the manufacturing facilities. As the controller of ABC Company, the CEO has come to you with a new opportunity that he's been working on. The CEO would like to use the some of the shingle scrap materials to build cedar dollhouses. While this new product line would add additional raw materials and be more time-intensive to manufacture than the cedar shingles, this new product line will be able to leverage ABC's existing manufacturing facilities as well as the current staff. Although this product line will require added expenses, it will provide additional revenue and gross profit to help reach the growth targets. The CEO is relying on you to help decide how this project can be afforded Provide details about the estimated product costs, what is needed to break even on the project, and what level of return this product is expected to provide. In order to help out the CEO, you need to prepare a six- to eight-page report that will contain the following information (including exhibits, but excluding your references and title page). Refer to the accompanying Excel spreadsheet (available through your online course) for some specific cost and profit information to complete the calculations. I. An overall risk profile of the company based on current economic and industry issues that it may be facing. II. Current company cash flow a. You need to complete a cash flow statement for the company using the direct method. b. Once you've completed the cash flow statement, answer the following questions: i. What does this statement of cash flow tell you about the sources and uses of the company funds? ii. Is there anything ABC Company can do to improve the cash flow? iii. Can this project be financed with current cash flow from the company? Why or why not? iv. If the company needs additional financing beyond what ABC Company can provide internally (either now or sometime throughout the life of the project), how would you suggest the company obtain the additional financing, equity or corporate debt, and why? III. Product cost: ABC Company believes that it has an additional 5,000 machine hours available in the current facility before it would need to expand. ABC Company uses machine hours to allocate the fixed factory overhead, and units sold to allocate the fixed sales expenses. Bases on current research, ABC Company expects that it will take twice as long to produce the expansion product as it currently takes to produce its existing product. a. What is the product cost for the expansion product under absorption and variable costing? b. By adding this new expansion product, it helps to absorb the fixed factory and sales expenses. How much cheaper does this expansion make the existing product? c. Assuming ABC Company wants a 40% gross margin for the new product, what selling price should it set for the expansion product? d. Assuming the same sales mix of these two products, what are the contribution margins and break-even points by product? IV. Potential investments to accelerate profit: ABC company has the option to purchase additional equipment that will cost about $42,000, and this new equipment will produce the following savings in factory overhead costs over the next five years: Year 1, $15,000 Year 2, $13,000 Year 3, $10,000 Year 4, $10,000 Year 5, $6,000 ABC Company uses the net-present-value method to analyze investments and desires a minimum rate of return of 12% on the equipment. a. What is the net present value of the proposed investment (ignore income taxes and depreciation)? b. Assuming a 5-year straight-line depreciation, how will this impact the factory's fixed costs for each of the 5 years (and the implied product costs)? What about cash flow? c. Considering the cash flow impact of the equipment as well as the time-value of money, would you recommend that ABC Company purchases the equipment? Why or why not? V. Conclusion: a. What are the major risk factors that you see in this project? b. As the controller and a management accountant, what is your responsibility to this project? c. What do you recommend the CEO do? I. An overall risk profile of the company based on current economic and industry issues that it may be facing. ABC Company's current financial information (before/without expansion) Dec. 31,20X2 Cash $ Accounts receivable (net) $ Merchandise inventory $ Property plant, & equipment $ Less: Accumulated $ depreciation Total assets $ Accounts payable $ Income taxes payable $ Common stock $ Retained earnings $ Total liabilities & stock, $ equity The firm's accrual-basis income statement revealed the following data: Sales $ Cost of goods sold $ selling and administrative expenses $ Depreciation expense $ Income taxes $ Dividends declared and paid during 20X2 $ ABC purchased $100,000 of equipment for cash on August 14, 20X2 a. Dec. 31,20X1 50,000 $ 70,000 120,000 $ 180,000 350,000 $ 280,000 400,000 $ 300,000 (170,000) $ (100,000) 750,000 $ 730,000 250,000 $ 210,000 40,000 $ 10,000 240,000 ### 220,000 $ 270,000 750,000 $ 730,000 1,200,000 800,000 250,000 70,000 30,000 100,000 (There was no interest expense.) II. Current company cash flow a. You need to complete a cash flow statement for the company using the direct method. a. You need to complete a cash flow statement for the company using the direct method. b. Once you've completed the cash flow statement, answer the following questions: See table a above/right i. What does this statement of cash Looking at the cash flow statement one can flow tell you about the sources and determine that the main sources of the companies revenue comes from the sell of the uses of the company funds? product. No revenues have been generated thorugh investing or financiing activitis. ii. Is there anything ABC Company can do to improve the cash flow? The company should look to iii. Can this project be financed with current cash flow from the company? Why or why not? iv. If the company needs additional financing beyond what ABC Company can provide internally (either now or sometime throughout the life of the project), how would you suggest the company obtain the additional financing, equity or corporate debt, and why? -20,000 -60,000 70,000 100,000 -70,000 20,000 40,000 30,000 0 -50,000 20,000 ABC Company Statement of Cash Flows (Direct) For the year ending December 31, 20X2 Cash flows from operating activities: Cash received from customers Less cash paid for: Inventory Other operating expenses Income taxes Net cash provided by operating activities Cash flows from investing activities: Purchase of equipment Net cash provided by investing activities Cash flows from financing activities: Retained earnings Issued stock Dividends on common Net cash provided by financing activities: Net decrease in cash Cash balance at January 1, 20X5 Cash balance at December 31, 20X5 $ 1,260,000 (830,000) (250,000) (30,000) Total purchases Total cash purchase (1,110,000) 150,000 (100,000) (100,000) (100,000) (100,000) (20,000) 70,000 50,000 $ 870,000 Total Purcha $ 830,000 Total cash p ases = Cost of Goods Sold Plus the Increase in Inventory (or, minus a decrease in inventory); purchase = Inventory Purchased Minus the Increase in Payables (or, plus a decrease in payables) Based on Chapter 5's exercise 5 ABC's Product information Current Product Selling Price Units produced and expected to be sold Machine Hours Direct Materials Direct labor dollars needed per product Variable Factory Overhead Variable Selling Expense Total Fixed Costs: Fixed Factory Overhead Fixed Selling expenses $14.50 80,000 40,000 $1.30 per unit $2.80 per unit $1.00 per Machine Hour $0.20 per unit $ $ Expansion Product (estimate) ? 5,000 5,000 $5.60 $4.00 $1.00 $0.20 per unit per unit per Machine Hour per unit 198,000 191,250 III. Product cost: ABC Company believes that it has an additional 5,000 machine hours available in the current facility before it would need to expand. ABC Company uses machine hours to allocate the fixed factory overhead, and units sold to allocate the fixed sales expenses. Bases on current research, ABC Company expects that it will take twice as long to produce the expansion product as it currently takes to produce its existing product. a. What is the product cost for the expansion product under absorption and variable costing? The product cost is $10.60 under the variable method and $12.93 under the absorbtion method. b. By adding this new expansion product, it helps to absorb the fixed factory and sales expenses. How much cheaper does this expansion make the existing product? c. Assuming ABC Company wants a 40% gross margin for the new product, what selling price should it set for the expansion product? d. Assuming the same sales mix of these two products, what are the contribution margins and breakeven points by product? a. a. ABC Product Costing using the variable method ABC Product Costing using the absorbtion method Units Machine hours Variable costs: Direct material Direct labor 5,000 5,000 28,000 20,000 Variable factory overhead Total product cost Cost per unit 5,000 53,000 10.60 $ b. ABC Product Fixed Overhead Adjustment Current After Expansion Units produced and expected to be sold 80,000 80,000 Machine Hours 40,000 40,000 Variable Costs: Direct Material $ 104,000 $ 104,000 Direct Labor 224,000 224,000 Variable factory Overheads 40,000 40,000 Fixed Costs: Fixed Factory Overheads 198,000 186,353 Total Cost 566,000 554,353 Cost per Unit $ 7.08 $ 6.93 Cost cheaper by new expension $ 0.15 Units Machine hours Variable costs: Direct material Direct labor 5,000 5,000 28,000 20,000 Variable factory overhead Fixed Manufacturing costs Total product cost Cost per unit 5,000 11,647 64,647 12.93 $ IV. Potential investments to accelerate profit: ABC company has the option to purchase additional equipment that will cost about $42,000, and this new equipment will produce the following savings in factory overhead costs over the next five years: Year 1, $15,000 Year 2, $13,000 Year 3, $10,000 Year 4, $10,000 Year 5, $6,000 ABC Company uses the net-present-value method to analyze investments and desires a minimum rate of return of 12% on the equipment. a. What is the net present value of the proposed investment (ignore income taxes and depreciation)? b. Assuming a 5-year straight-line depreciation, how will this impact the factory's fixed costs for each of the 5 years (and the implied product costs)? What about cash flow? c. Considering the cash flow impact of the equipment as well as the time-value of money, would you recommend that ABC Company purchases the equipment? Why or why not? See table it is unknown what, if any, the salvage value of the equipment is the total net present value in this scenarios is unknon but the imp the factorys fixed costs could increase up to 8,400 per year resulting in an NPV of 31,644. The depriciation costs would not have a effect on cash flows. Depriciation wuld have an indirect on cash flows in that the cost of depriciatin would be catagorized as an exp reduce the income tax of the company. When considering the impact of current cash flow and the time value of money it would not be reccommended that the ABC comp purchase the equipment. The NPV value over the next five years resuts in a negative. Using the infomraion provided there is no be cash flow and the time value of money. ABC Company Equipment Net Present Value Assessment Cash outflow Cash inflow Net cash flow PVIF (42,000) 15,000 15,000 0.893 13,000 13,000 0.797 10,000 10,000 0.712 10,000 10,000 0.636 6,000 6,000 0.567 Net present Value (42,000) 13,395 10,361 7,120 6,360 3,402 -1,362 ABC Company Equipment Net Present Value Assessment (w/ depriciation impact) Cash outflow Cash inflow Net cash flow PVIF Initial cash investment (42,000) Year 1 (8,400) 15,000 6,600 0.893 Year 2 (8,400) 13,000 4,600 0.797 Year 3 (8,400) 10,000 1,600 0.712 Year 4 (8,400) 10,000 1,600 0.636 Year 5 (8,400) 6,000 -2,400 0.567 Net present Value (42,000) 5,894 3,666 1,139 1,018 -1,361 -31,644 a. Initial cash investment Year 1 Year 2 Year 3 Year 4 Year 5 b pacts of direct pense and mpany enifit to V. Conclusion: a. What are the major risk factors that you see in this project? b. As the controller and a management accountant, what is your responsibility to this project? c. What do you recommend the CEO do