Sales Salvage value old machine Depreciation of the old machine, or loss write-off Depreciation-new machine Operating costs Selling and administrative expenses Total expenses Net operating loss Net advantage 333333 of purchasing the new machine Keep Old Machine $ 1,680,000 0 80,000 0 16,000✔ 80,000 144,000 336,000 112,000 1,008,000✔ 1,008,000✔ 1,424,000 X$ 256,000 ummary $ 96,000 Buy New Machine $1,680,000 333333 1,344,000 X 336,000 $ Difference 0 16,000 0 (144,000) 224,000 0 2. Compute the net advantage of purchasing the new machine using only relevant costs in your analysis. (Do not round intermediate calculations.) 90000 80,000 x $ 96,000 3. What is the minimum saving in annual operating costs that must be achieved in order for the president to consider buying the new machine?
Q: d. With respect to the deferred gain on intercompany sale, what effect (i.e., amount) will it have…
A: An adjusting journal entry is made in the company's general ledger at the end of an accounting…
Q: pany's Ski Department for a recent quarter is presented below: The Alpine House, Inc. Income…
A: Contribution format income statement is an income statement in which all variable expenses are…
Q: Piazzi, Inc. sold $400,000 of its 9%, fiveyear bonds dated January 1, 2013, on May 1, 2013, for…
A: INTRODUCTION:- This question involves a scenario where Piazzi, Inc. has sold its bonds to investors.…
Q: The controller of Bramble Company estimates sales and production for the first four months of 2022…
A: Budgeting - Budgeting is the process of estimating future operations based on past performance. %…
Q: A family friend has asked your help in analyzing the operations of three anonymous companies…
A: Introduction:- Return on investment (ROI) :— It is calculated by dividing net operating income by…
Q: Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes…
A: Journal Entry is the primary step to record the transaction in the books of accounts. The expenses…
Q: Health 'S Us, Inc., uses a traditional product costing system to assign overhead costs uniformly to…
A: Calculation of quality control overhead under traditional based costing system and activity based…
Q: What are the key differences between a conventional audit and a fraud examination? 2. To what…
A: The key differences between a conventional audit and a fraud examination are as follows: Purpose:…
Q: James Duffney, CPA, has randomly selected and audited a sample of 100 of Will-Mart’s accounts…
A: Mean Per unit Method - This method estimates the population's total value using the sample audited…
Q: Sleeter Corporation makes one product and it provided the following information to help prepare the…
A: Introduction:- The production budget is prepared to estimate the number of units to be produced…
Q: ) Problem 26-27 (LO. 6) The following independent cases involve the value of a closely held business…
A: Working : If the company, the company does not register the estate according to the corrected value.…
Q: 0 Microsoft's current assets consist of cash, short-term investments, accounts receivable, and…
A: The question is based on the ratio of cost accounting :
Q: 21. A warning sign that ordinary expenses are now being classified as nonrecurring or nonoperating…
A: Operating expenses are the expenses that a company incurs in its normal course of business…
Q: Problem 9-3 (IAA) Bangladesh Company provided the following information for the current year: Sales…
A: Problem 9-3 (IAA) : Income statement of Bangladesh company for current year : *Finance costs =…
Q: Cash Flows from Operating Activities-Indirect Method The income statement disclosed the following…
A: Under indirect method of cash flow statement, net income is reconcile with the cash flow from…
Q: Manufacturing overhead is the costs that can be traced directly to specific units produced.…
A: Manufacturing overheads are indirect costs. Indirect costs are those costs which cannot be easily…
Q: Current Position Analysis The following data were taken from the balance sheet of Albertini Company…
A: Working capital means a capital in business which is used in day to day activities. If we derive it…
Q: Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment…
A: The cost per unit formula involves the sum of fixed and variable costs, which is then divided by the…
Q: Ed Co. manufactures two types of O rings, large and small. Both rings use the same material but…
A: Answer:- Formulas:- 1. Direct materials price variance = Actual quantity x (Actual price -…
Q: ed rences Required Information. [The following information applies to the questions displayed below]…
A: Inventory - Inventory includes both the raw materials needed in production and the finished…
Q: Beginning work in process inventory Units started and completed Units completed and transferred out…
A: Under FIFO method, the cost added during the period is considered to calculate cost per equivalent…
Q: The variable costs per unit are $4 when a company makes 10,000 units . What are the per unit…
A: Variable Cost :— It is the cost that changes with change in units of activity. Variable cost per…
Q: In a department, 27,000 units are completed and transferred out and 10,400 remain in ending WIP at…
A: Note : Equivalent units are defined as how much work has been done on a certain number of units.…
Q: Sunn Company manufactures a single product that sells for $280 per unit and whose variable costs are…
A: Break-even point :— It is the point of production where total cost is equal to total revenue. At…
Q: On day one, you gave a gift certificate from Chewy to your dog trainer. You paid $75 for the gift…
A: Chewy should recognize revenue for the gift certificate at the time of redemption by the dog…
Q: Problem 8-3 (IAA) Summa Company revealed the following account balances on December 31, 2022:…
A: An income statement is a statement of an organization's revenue and expenses, which results in a net…
Q: what us the 2021 general entry?
A: An employer agrees to provide employees with a predetermined amount of retirement benefits upon…
Q: Problem 9-13 Multiple choice 1. The income statement reveals Resources and equity at a point in…
A: “Since you have posted multiple questions with multiple sub parts, we will provide the solution only…
Q: A) Since the UML or Projected Misstatement is less than the tolerable misstatement, the account is…
A: If the UML or Projected Misstatement in a sampling is $8,000, while the tolerable misstatement is…
Q: Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $20 per…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Blossom, Incorporated, is a small company that manufactures three versi Unit information for its…
A: Since you have posted a question with multiple sub-parts we will do the first three requirements,…
Q: Alter's Home Center (AHC) sells renovation and remodeling products to both contractors and…
A: The activity rate is calculated as estimated cost divided by the estimated usage for the activity.…
Q: The following information is available for the employees of Yui Company for the first week of…
A: a. Computation of Gross Earnings Employee Hours Worked x Wage rate per hour = Gross Pay Sam…
Q: Andretti Company has a single product called a Dak. The company normally produces and sells 93,000…
A: Requirement 3: Relevant cost refers to the avoidable cost that will be incurred only if the decision…
Q: Cullumber Company is considering two alternatives. Alternative A will have revenues of $149,000 and…
A: Incremental Approach :— Under this approach, two different alternatives is compared. Comparison is…
Q: Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution…
A: Income statement :— It is one of the financial statement that shows profitability, total revenue and…
Q: Tempo Company's fixed budget (based on sales of 10,000 units) folllows. Fixed Budget Sales (10,000…
A: A flexible budget is a budget prepared by the management by considering the fluctuation in variable…
Q: Prior to liquidating their partnership, Craig and Jenny had capital accounts of $62,080 and…
A: The final distribution from the liquidation of a partnership will depend on a number of factors,…
Q: By how many years did the Sarbanes-Oxley Act increase the potential prison sentence for fraud? a.…
A: The Sarbanes-Oxley Act (SOX) is a US federal law enacted in 2002 in response to a number of…
Q: Madison Corporation is authorized to issue $600,000 of 7-year bonds dated June 30, 2019, with a…
A: Time value of money :— According to this concept, value of money in present day is greater than the…
Q: CRAZY Co, is a major producer of beauty products. The company uses a standard cost system to help…
A: Formula : (a) Standard Fixed manufacturing overhead rate = Fixed Manufacturing overhead cost /…
Q: Michael Sierra contributes $50 to a flexible spending account each period. He is married, claims…
A: For the year 2021: Social Security tax rate is 6.2% on earnings up to $142,800. Therefore, Michael's…
Q: Required: Use the information in the adjusted trial balance to prepare (a) the income statement for…
A: Financial statements is the one prepared by the companies to depict their financial performance and…
Q: , Henry sole proprietorship, Western Wear Apparel, generated a $110,000 Schedule C net profit.…
A: There are provisions for the qualified business deductions which can be used for sole…
Q: Snowden Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and…
A: In traditional basis, overhead cost are allocated based on only taking one item as base for…
Q: 1. Austin Company manufactures 2 products, Flacca and Gordo. Overhead costs are comprised of machine…
A: Solution... In order to assign overhead costs to the Products first of all we need to calculate…
Q: 22. During 2022, Haggard Company purchased marketable equity securities for P 1,850,000 to be held…
A: Introduction:- An income statement is a financial statement that summarises a company's income and…
Q: n a makeorbuy decision, which of the following would not be relevant? Question content area bottom…
A: A make-or-buy decision is a strategic decision that organizations make to decide whether to produce…
Q: Longwood Corporation processes a liquid into three outputs: K-2. K-4, and K-5. The sales value of…
A: Joint and by product comes into existence in the process costing, when product has similar value…
Q: Lampierre makes brass and gold frames. The company computed this information to decide whether to…
A: The overhead is applied to the production on the basis of pre-determined overhead rate. The activity…
Please help me
Step by step
Solved in 3 steps
- Mallette Manufacturing, Inc., produces washing machines, dryers, and dishwashers. Because of increasing competition, Mallette is considering investing in an automated manufacturing system. Since competition is most keen for dishwashers, the production process for this line has been selected for initial evaluation. The automated system for the dishwasher line would replace an existing system (purchased one year ago for 6 million). Although the existing system will be fully depreciated in nine years, it is expected to last another 10 years. The automated system would also have a useful life of 10 years. The existing system is capable of producing 100,000 dishwashers per year. Sales and production data using the existing system are provided by the Accounting Department: All cash expenses with the exception of depreciation, which is 6 per unit. The existing equipment is being depreciated using straight-line with no salvage value considered. The automated system will cost 34 million to purchase, plus an estimated 20 million in software and implementation. (Assume that all investment outlays occur at the beginning of the first year.) If the automated equipment is purchased, the old equipment can be sold for 3 million. The automated system will require fewer parts for production and will produce with less waste. Because of this, the direct material cost per unit will be reduced by 25 percent. Automation will also require fewer support activities, and as a consequence, volume-related overhead will be reduced by 4 per unit and direct fixed overhead (other than depreciation) by 17 per unit. Direct labor is reduced by 60 percent. Assume, for simplicity, that the new investment will be depreciated on a pure straight-line basis for tax purposes with no salvage value. Ignore the half-life convention. The firms cost of capital is 12 percent, but management chooses to use 20 percent as the required rate of return for evaluation of investments. The combined federal and state tax rate is 40 percent. Required: 1. Compute the net present value for the old system and the automated system. Which system would the company choose? 2. Repeat the net present value analysis of Requirement 1, using 12 percent as the discount rate. 3. Upon seeing the projected sales for the old system, the marketing manager commented: Sales of 100,000 units per year cannot be maintained in the current competitive environment for more than one year unless we buy the automated system. The automated system will allow us to compete on the basis of quality and lead time. If we keep the old system, our sales will drop by 10,000 units per year. Repeat the net present value analysis, using this new information and a 12 percent discount rate. 4. An industrial engineer for Mallette noticed that salvage value for the automated equipment had not been included in the analysis. He estimated that the equipment could be sold for 4 million at the end of 10 years. He also estimated that the equipment of the old system would have no salvage value at the end of 10 years. Repeat the net present value analysis using this information, the information in Requirement 3, and a 12 percent discount rate. 5. Given the outcomes of the previous four requirements, comment on the importance of providing accurate inputs for assessing investments in automated manufacturing systems.Santosh Plastics Inc. purchased a new machine one year ago at a cost of $66,000. Although the machine operates well and has five more years of operating life, the president of Santosh Plastics is wondering if the company should replace it with a new electronic machine that has just come on the market. The new machine costs $99,000 and is expected to slash the current annual operating costs of $46,200 by two-thirds. The new machine is expected to last for five years, with zero salvage value at the end of five years. The current machine can be sold for $11,000 if the company decides to buy the new machine. The company uses straight-line depreciation. In trying to decide whether to purchase the new machine, the president has prepared the following analysis: Book value of the old machine Less: Salvage value. Net loss from disposal $55,000 11,000 $44,000 "Even though the new machine looks good," said the president, "we can't get rid of that old machine if it means taking a huge loss on it.…Required: 1. Prepare a comparative income statement covering the next five years, assuming: a. The new machine is not purchased. b. The new machine is purchased. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) Total expenses w Transcribed Text of purchasing the new machine Keep Old Machine S Minimum saving in costs 5 Years Summary Buy New Machine Ĉ Difference 2. Compute the net advantage of purchasing the new machine using only relevant costs in your analysis. (Do not round intermediate calculations.) Check my work 3. What is the minimum saving in annual operating costs that must be achieved in order for the president to consider buying the new machine?
- Antara Ltd. is considering the purchase of a new machine for the production of latex. The machine costs $500,000. The machine will be usable for ten years, at which time it will become worthless. Antara plans to update to a new model in five years when it will be sold for $100,000. Annual revenues from the new machine are expected to be $130,000 per year for the first four years of use and $95,000 in Year 5. The company uses the straight-line depreciation method for its non-current assets. The company's cost of capital is 10%. Required: a) Calculate the Accounting Rate of Return (ARR) for the new machine. (Round your answer to two decimal places). b) Calculate the Payback Period for the new machine (Round your answer to two decimal places). c) Calculate the Net Present Value (NPV) for the new machine. Show your workings.Garrett Boone, Bridgeport Enterprises’ vice president of operations, needs to replace an automatic lathe on the production line. The model he is considering has a sales price of $233,282 and will last for 15 years. It will have no salvage value at the end of its useful life. Garrett estimates the new lathe will reduce raw materials scrap by $24,000 per year. He also believes the lathe will reduce energy costs by $6,000 per year. If he purchases the new lathe, he will be able to sell the old lathe for $5,100.Click here to view the factor table.(a) Calculate the lathe’s internal rate of return. (Round answer to 0 decimal places, e.g. 25%.) Internal rate of return enter the internal rate of return in percentages rounded to 0 decimal places %Builtrite is considering the purchase of a new five-year machine worth $90,000. It will cost another $10,000 to install the machine and Builtrite will need to keep an extra $9,000 in inventory on hand due to the machine's efficiency. The current machine being used is 5 years old and originally cost $60,000 and is being depreciated down to zero over a 10-year period. If the current machine were sold today, it could be sold for $45,000. In five years, the new machine is estimated to have a salvage value of $36,000. Two employees will need to be trained for the new machine at a cost of $4000. The new machine is expected to produce $80,000 in annual savings. Builtrite is in the 34% tax bracket. What is the terminal cash flow for the new machine? O $23.760 O $31,800 O $32,760
- As a result of improvements in product engineering, United Automation is able to sell one of its two milling machines. Both machines perform the same function but differ in age. The newer machine could be sold today for $50,000. Its operating costs are $20,000 a year, but in five years the machine will require a $20,000 overhaul. Thereafter, operating costs will be $30,000 until the machine is finally sold in year 10 for $5,000. The older machine could be sold today for $25,000. If it is kept, it will need an immediate $20,000 overhaul. Thereafter, operating costs will be $30,000 a year until the machine is finally sold in year 5 for $5,000. Both machines are fully depreciated for tax purposes. The company pays tax at 35%. Cash flows have been forecasted in real terms. The real cost of capital is 12%. Which machine should United Automation sell? Explain the assumptions underlying your answer.A packaging factory is considering the replacement of some equipment. The new plan is to install equipment to produce a new can that uses less energy and less metal than the old one. Current equipment was installed 5 years ago for $100 million and can be sold for $35 million. Due to obsolescence the depreciation of this equipment results in an annual depreciation of $4 million for the next years. If you keep this equipment for one more year your operating and maintenance costs will be $65 million increasing by $3 million/year each year thereafter. The new equipment will cost $130 million, with an economic life of 8 years and a salvage value of $10 million. Its operating and maintenance costs will be $49 million. For a TMAR = 15% p.a. what new equipment should be installed? Make a recommendation about it. (Answer: The solution would be to use the current equipment for another two years and then exchange it for new equipment.Cor's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $10,100 per year and will cut annual operating costs by $11,750. The new system will also prompt a $4,900 increase in net working capital. The system will cost $60,200 to purchase and install. This system is expected to have a 4-year life and will be depreciated to zero using straight-line depreciation and have no salvage value. The tax rate is 21 percent and the required return is 10.5 percent. What is the NPV of purchasing the pressure cooker? OCF = $ CFO = S CF4=$ NPV = It It It It It 11 11
- DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $450,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $135,000. The old machine is being depreciated by $90,000 per year for each year of its remaining life. If DeYoung doesn't replace the old machine, it will have no salvage value at the end of its useful life. The new machine has a purchase price of $775,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total,…DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $450,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $135,000. The old machine is being depreciated by $90,000 per year for each year of its remaining life. If DeYoung doesn't replace the old machine, it will have no salvage value at the end of its useful life. The new machine has a purchase price of $775,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total,…DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $800,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $270,000. The old machine is being depreciated by $160,000 per year for each year of its remaining life. The new machine has a purchase price of $1,185,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, an annual savings of $250,000 will be realized if the new machine is installed. The company's…