With Nature wants to take advantage of children's current fascination with dinosaurs by adding several scale-model dinosaurs Toying to its existing product line. Annual sales of the dinosaurs are estimated at 80,000 units at a price of $6 per unit. Variable manufacturing costs are estimated at $2.50 per unit, incremental fixed manufacturing costs (excluding depreciation) at $47000 annually, and additional selling and general expenses related to the dinosaurs at $59,000 annually To manufacture the dinosaurs, the company must invest $350,000 in design molds and special equipment. Since toy fads wane in popularity rather quickly, Toying With Nature anticipates the special equipment will have a three-year service life with only a $20,000 salvage value. Depreciation will be computed on a straight-line basis. All revenue and expenses other than depreclation will be recelved or paid in cash. The company's combined federal and state income tax rate is 40 percent Required: a. Prepare a schedule showing the estimated increase in annual net income from the planned manufacture and sale of dinosaur toys b. Compute the annual net cash flows expected from this project c. Compute the following. Assume discounted at an annual rate of 15 percent. Use Exhibits 26-3 and 26-4 where necessary Complete this question by entering your answers in the tabs below. Required A Required B Required C Prepare a schedule showing the estimated Increase in annual net income from the planned manufacture and sale of dinosaur toys TOYING WITH NATURE Schedule of Estimated Net Income Estimated sales Less estimated incremental oosts: Income before income taxes With Nature wants to take advantage of children's current fascination with dinosaurs by adding several scale-model dinosaurs Toying to its existing product line. Annual sales of the dinosaurs are estimated at 80,000 units at a price of $6 per unit. Variable manufacturing costs are estimated at $2.50 per unit, incremental fixed manufacturing costs (excluding depreciation) at $47000 annually, and additional selling and general expenses related to the dinosaurs at $59,000 annually To manufacture the dinosaurs, the company must invest $350,000 in design molds and special equipment. Since toy fads wane in popularity rather quickly, Toying With Nature anticipates the special equipment will have a three-year service life with only a $20,000 salvage value. Depreciation will be computed on a straight-line basis. All revenue and expenses other than depreclation will be recelved or paid in cash. The company's combined federal and state income tax rate is 40 percent Required: a. Prepare a schedule showing the estimated increase in annual net income from the planned manufacture and sale of dinosaur toys b. Compute the annual net cash flows expected from this project c. Compute the following. Assume discounted at an annual rate of 15 percent. Use Exhibits 26-3 and 26-4 where necessary Complete this question by entering your answers in the tabs below. Required A Required B Required C Prepare a schedule showing the estimated Increase in annual net income from the planned manufacture and sale of dinosaur toys TOYING WITH NATURE Schedule of Estimated Net Income Estimated sales Less estimated incremental oosts: Income before income taxes
