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PLEASE HELP WITH ACCOUNTING and answer all questions Purposef You will anatyee the impact of a constrained resourre on NOI as well as evaluate the
PLEASE HELP WITH ACCOUNTING and answer all questions
Purposef You will anatyee the impact of a constrained resourre on NOI as well as evaluate the purchase of a capital axret and make necommendations to management. Upon successfid completion of this project you vill (l) befter understand how to determine if a resowne is constrained, apply skills to anobye poofurtr and cvahate how to maximize NOI and (2) apply skills to analyze and enaluate the purchase of a capital asset. Task: Work within your leam. Revicw Mr. Puffir s. Muffirs operation. Assaming a new oven is purchased, determine which maffin should be selected to maximise NOI for the new oven. Based on the muffin selection, determine the NPV for the new oven and finally discuss potential other options for Mr. Puffin s imvestment. Criteria for Deliverable: Individually prepare a 12 page memo addressed to Mr. Puffin. The memo should NOT be overty technical and should asse the format below and address the following: 1. Memo format: a. Date b. Salutation (addressed to Mr. Puffin) c. Body (this is where you address the questions posed) d. Closing/signature 2. Provide a recommendation to Mr. Puffin for the tuse the exeess cash purchase the new oven, (or something else) and why. 3. If a new oven is purchased, provide a recommendation to Mr. Puffin as to which muffin type should be baked in it and why. Mr. Puffin has been secing crazy demand for every kind of muffin he has been selling. He does not want to disrupt his customer base by charging more or changing how much of what be currently produces. However, Mr. Puffin has accumulated some excess cash because of his recent success. As a result, he wants to put his money to good use. He is considering investing in a new state of the art oven for $50,000. This oven will be operated for 270 days out of the year for 8 hours a day. It will have a useful life of 10 years. It has an annual maintenance expense of $4,000. Additionally, it will require recalibration in year 5 costing $6,000 and has a salvage value of $20,000. Mr. Puffin's Muffins has a cost of capital of 8% Before deciding whether the investment is a good one, Mr. Puffin needs to decide what his even will be used for. He is thinking about using the oven for additional oocy-goocy chocolate chip muffins (CC), brown butter cranberry muffins (CR), or blueberry muffins (BB). A batch of CC maffins yield 16 muffins. They take 4 hours to bake and have a contribution margin of $2 per muffin. A batch of CR muffins yield 10 muffins. They take 2 hours to bake and have a contribution margin of $1.50 per muffin. BB muffins yield 12 muffins. They take I hour to bake and have a contribution margin of $0.50 per muffin Step by Step Solution
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