The ansswer should include the following
;
EXCEL ASSIGNMENT FOR CHAPTER 21 IEANS FOR ALL MAN KIND" Due Date for Assignment May 1, 2017 Jeans for all is clothing manufacturer. Its El Paso plant will become idle Man (eans) an international controller, has been on December 31, 201 Alejandra Lucero, the corporate asked, by the Chief Financial three options regarding this plant. officer, to look at a) The plant, purposes, and can be sold immediately for $450,000 which is fully depreciated for tax b) The Corporation, one of "Jeans" suppliers, for plant can be leased to the Blue Denim four years. Denim would pay "Jeans" $110,000 rent per Under the lease terms, Blue S20,000 year (payable at the year-e Under the ease expects discount off the normal pri of fabric purchased by "Jeans". costs. agreement, Blue De would bear all of the plant's ownership to sell this plant for $75,000 at the end of the four-year lease. c) make souvenir jackets for the Olympics. Fixed The plant could be used for four years to overhead costs before a equipment upgrades are estimated to be $10,000 annually for the four-year-period. The jackets are expected to sell for $55 each. Variable cost per unit is expected to be $42. The following production and sales of jackets are expected to be: 2017, 9,000 units; 2018, 13,000 units; 2019, 15,000 units; 2020, 5,0oo units In order to manufacture the jackets, some of the plant equipment would need to be upgraded at an immediate cost of $80,000. The equipment would be depreciated using the straight-line depreciation method and zero terminal disposal value over the four years it would be in use. Because of the equipment upgrades, "Jeans", could sell the plant for $135,000 at the end of the four years. No change in working capital would be required Jeans", treats all cash flows as if they occur at the end of the year, and it uses an after tax required rate of return of 10%. Jeans is subject to a 35% tax rate on a income including capital gains EXCEL ASSIGNMENT FOR CHAPTER 21 IEANS FOR ALL MAN KIND" Due Date for Assignment May 1, 2017 Jeans for all is clothing manufacturer. Its El Paso plant will become idle Man (eans) an international controller, has been on December 31, 201 Alejandra Lucero, the corporate asked, by the Chief Financial three options regarding this plant. officer, to look at a) The plant, purposes, and can be sold immediately for $450,000 which is fully depreciated for tax b) The Corporation, one of "Jeans" suppliers, for plant can be leased to the Blue Denim four years. Denim would pay "Jeans" $110,000 rent per Under the lease terms, Blue S20,000 year (payable at the year-e Under the ease expects discount off the normal pri of fabric purchased by "Jeans". costs. agreement, Blue De would bear all of the plant's ownership to sell this plant for $75,000 at the end of the four-year lease. c) make souvenir jackets for the Olympics. Fixed The plant could be used for four years to overhead costs before a equipment upgrades are estimated to be $10,000 annually for the four-year-period. The jackets are expected to sell for $55 each. Variable cost per unit is expected to be $42. The following production and sales of jackets are expected to be: 2017, 9,000 units; 2018, 13,000 units; 2019, 15,000 units; 2020, 5,0oo units In order to manufacture the jackets, some of the plant equipment would need to be upgraded at an immediate cost of $80,000. The equipment would be depreciated using the straight-line depreciation method and zero terminal disposal value over the four years it would be in use. Because of the equipment upgrades, "Jeans", could sell the plant for $135,000 at the end of the four years. No change in working capital would be required Jeans", treats all cash flows as if they occur at the end of the year, and it uses an after tax required rate of return of 10%. Jeans is subject to a 35% tax rate on a income including capital gains
