Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Todd Lease is operated by Tyler Corporation. The foreman of the Todd Lease must make a decision regarding the replacement of a pumping unit

image text in transcribedimage text in transcribed

The Todd Lease is operated by Tyler Corporation. The foreman of the Todd Lease must make a decision regarding the replacement of a pumping unit on the lease. The foreman has identified three possible alternatives: 18. Alternative 1 Purchase a new pumping unit. The foreman has located a vendor willing to sell the unit needed for a delivered cost of $65,000 FOB destination (i.e., the manufacturer pays freight to the destination point). Alternative 2 The Odessa Lease, which is also operated by Tyler Corporation, has a surplus pumping unit that could be used. If the Odessa Lease equipment is used, the Odessa Lease would be charged with the cost of repairing the unit that would then be transferred to the Todd Lease at Condition B. Alternative 3 The Midland Lease, which is also operated by Tyler Company, has a surplus pumping unit that could be used. If the Midland Lease pumping unit is used, the equipment would be transferred unrepaired at Condition C. Other information: Trucking Costs $ 0 2,000 3,000 Unit Repair Costs Tyler's Working Interest n/a 100% Todd Lease $10,000 5,000 60% Odessa Lease 30% Midland Lease The current market price for the unit is $70,000 REQUIRED: Determine what the foreman on the Todd Lease should do. The Todd Lease is operated by Tyler Corporation. The foreman of the Todd Lease must make a decision regarding the replacement of a pumping unit on the lease. The foreman has identified three possible alternatives: 18. Alternative 1 Purchase a new pumping unit. The foreman has located a vendor willing to sell the unit needed for a delivered cost of $65,000 FOB destination (i.e., the manufacturer pays freight to the destination point). Alternative 2 The Odessa Lease, which is also operated by Tyler Corporation, has a surplus pumping unit that could be used. If the Odessa Lease equipment is used, the Odessa Lease would be charged with the cost of repairing the unit that would then be transferred to the Todd Lease at Condition B. Alternative 3 The Midland Lease, which is also operated by Tyler Company, has a surplus pumping unit that could be used. If the Midland Lease pumping unit is used, the equipment would be transferred unrepaired at Condition C. Other information: Trucking Costs $ 0 2,000 3,000 Unit Repair Costs Tyler's Working Interest n/a 100% Todd Lease $10,000 5,000 60% Odessa Lease 30% Midland Lease The current market price for the unit is $70,000 REQUIRED: Determine what the foreman on the Todd Lease should do

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

COMMENT INVESTIR ABC DE LA FINANCE

Authors: OLIVIER CHAZOULE

1st Edition

2020367521, 978-2020367523

More Books

Students also viewed these Finance questions

Question

How does selection differ from recruitment ?

Answered: 1 week ago

Question

Which state had the highest total revenue overall?

Answered: 1 week ago

Question

How much total revenue did that state generate overall?

Answered: 1 week ago