Question
Problem 1 - Lease or sell Felix Company owns equipment with a cost of $365,900 and accumulated depreciation of $56,200 that can be sold for
Problem 1 - Lease or sell
Felix Company owns equipment with a cost of $365,900 and accumulated depreciation of $56,200 that can be sold for $274,300, less a 4% sales commission. Alternatively, Felix Company can lease the equipment for three years for a total of $284,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Felix Company on the equipment would total $15,100 over the three year lease.
- Prepare a differential analysis on February 18, as to whether Felix Company should lease (Alternative 1) or sell (Alternative 2) the equipment.
- Should Felix Company lease (Alternative 1) or sell (Alternative 2) the equipment?
Problem 2 - Discontinue a segment
Product AG52 has revenues of $195,200, variable cost of goods sold of $114,300, variable selling expenses of $33,300, and fixed costs of $60,500, creating a loss from operations of $12,900.
- Prepare a differential analysis as of October 7 to determine if Product AG52 should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount is zero, enter "0". Use a minus sign to indicate a loss.
- Determine if Product AG52 should be continued (Alternative 1) or discontinued (Alternative 2).
Problem 3 - Make or buy
A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $156 per unit (100 bottles), including fixed costs of $35 per unit. A proposal is offered to purchase small bottles from an outside source for $95 per unit, plus $12 per unit for freight.
- Prepare a differential analysis dated July 31 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles, assuming fixed costs are unaffected by the decision. If an amount is zero, enter "0". Use a minus sign to indicate a loss.
- Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles.
Problem 4 - Replace equipment
A machine with a book value of $250,200 has an estimated six-year life. A proposal is offered to sell the old machine for $217,300 and replace it with a new machine at a cost of $280,800. The new machine has a six-year life with no residual value. The new machine would reduce annual direct labor costs from $49,300 to $39,400.
- Prepare a differential analysis dated April 11 on whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). If an amount is zero, enter "0". Use a minus sign to indicate subtracted or negative numbers or a loss.
- Should the company continue with the old machine (Alternative 1) or replace the old machine (Alternative 2)?
Problem 5 - Process or sell
Product J19 is produced for $3.46 per gallon. Product J19 can be sold without additional processing for $4.16 per gallon, or processed further into Product R33 at an additional cost of $0.43 per gallon. Product R33 can be sold for $4.38 per gallon.
- Prepare a differential analysis dated April 30 on whether to sell Product J19 (Alternative 1) or process further into Product R33 (Alternative 2). If required, round your answers to the nearest whole dollar.
- Should Product J19 be sold (Alternative 1) or processed further into Product R33 (Alternative 2)?
Problem 6 - Accept business at a special price
Product A is normally sold for $43 per unit. A special price of $33 is offered for the export market. The variable production cost is $26 per unit. An additional export tariff of 11% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order.
- Prepare a differential analysis dated March 16 on whether to reject (Alternative 1) or accept (Alternative 2) the special order. If required, round your answers to two decimal places. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.
- Should the special order be rejected (Alternative 1) or accepted (Alternative 2)?
MAKE SURE TO SHOW ALL STEPS, PLEASE AND THANK YOU:).
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