Question 3 tis now early January 2019 and you. CPA, work for York & Partners, Chartered Professional Accountants LLP. You have recently been introduced to Tony Stark, the sole owner and operator of a kitchen cabinet manufacturing company, Avengers Kitchens Co. (AKC). 2018, AKC manufactured and sold 500 sets of kitchen cabinets is best year ever. As a result, Tony began to share with you his ideas about the future of his company. have more space than I can use in our manufacturing facility right now. Therefore, I could immediately invest in new equipment and hire actifional employees to increase our production capacity by 75 sets of kitchen cabinets per year. I am not sure whether should make his investment or not. "To date, I think my main reason for success has been a focus on keeping tight control over the materials, labour, and overhead costs by reviewing them at the end of each quarter based solely on the results reported on the income statement. This helps me generate as high a profit as possibile." You took notes during the meeting (Appendix I). You decide to dratt a memo to evaluate the investment proposal APPENDO INOTES FROM MEETING WITH TONY STARK The new equipment will cost $750,000 and needs to be paid for up tront. The useful le of the equipment is expected to be 10 years. Assume straight line depreciation in your analysis and no salvage value (euse depreciation instead of CCA in your cash flows) Fou new part time employees woud need to be hired and each would be paid an armual salary of $40,000 per year plus 19% tor benefits. Those new employees could be hired in stages, two of them Immediately and two of them starting two years from now. The capachy nonso will not be realized troma sales proced.com at three years, after which time it will remain stable for the remaining years, Question 3 tis now early January 2019 and you. CPA, work for York & Partners, Chartered Professional Accountants LLP. You have recently been introduced to Tony Stark, the sole owner and operator of a kitchen cabinet manufacturing company, Avengers Kitchens Co. (AKC). 2018, AKC manufactured and sold 500 sets of kitchen cabinets is best year ever. As a result, Tony began to share with you his ideas about the future of his company. have more space than I can use in our manufacturing facility right now. Therefore, I could immediately invest in new equipment and hire actifional employees to increase our production capacity by 75 sets of kitchen cabinets per year. I am not sure whether should make his investment or not. "To date, I think my main reason for success has been a focus on keeping tight control over the materials, labour, and overhead costs by reviewing them at the end of each quarter based solely on the results reported on the income statement. This helps me generate as high a profit as possibile." You took notes during the meeting (Appendix I). You decide to dratt a memo to evaluate the investment proposal APPENDO INOTES FROM MEETING WITH TONY STARK The new equipment will cost $750,000 and needs to be paid for up tront. The useful le of the equipment is expected to be 10 years. Assume straight line depreciation in your analysis and no salvage value (euse depreciation instead of CCA in your cash flows) Fou new part time employees woud need to be hired and each would be paid an armual salary of $40,000 per year plus 19% tor benefits. Those new employees could be hired in stages, two of them Immediately and two of them starting two years from now. The capachy nonso will not be realized troma sales proced.com at three years, after which time it will remain stable for the remaining years
