Team,

May I have you assistance with these questions?

Please explain the step by step if possible.

1. The company is evaluating two specific proposals to market a new product. The current interest rate is 10%.Proposal A calls for setting up an in-house manufacturing shop to make the product, requiring an investment of $500,000. The expected profits for the first to fifth years are $150,000, $200,000, $250,000, $150,000, and $100,000, respectively.Proposal B suggests that the manufacturing operation be outsourced by contracting an outside shop, requiring a front-end payment of $300,000. The expected profits for the first to fifth years are $50,000, $150,000, $200,000, $300,000, and $200,000, respectively. The expected profits would be lower in earlier years due to third-party markup.Which proposal should the company accept?
2. A manufacturing company makes three products, A, B, and C. The fixed FO is $60,000, consisting of $10,000 for material handling, material waste, and procurement; $30,000 for rent and utilities; and $20,000 for safety and canteen costs. Other costs are shown in Table 6.16. a. Determine the product cost for products A, B, and C, using the ABC method. b. If products A, B, and C are sold at $400, $350, and $150 per unit, respectively, what is the gross profit for each product?

c. What is the company's total gross profit per month if all units produced are sold?

Other Cost, Table 6.16

Product A Product B Product C

Numbers of Units per month 250 400 900

Total material cost per month ($) 5000 8000 4000

Labor hour per unit 4 3.5 1.5

Labor rate per unit ($ per hour) 25 20 30

Machine hour per unit (hour) 1 1 3