The banker has suggested that Greg can reduce his fixed costs by $150,000 if he will not buy any vehicles. Greg can instead rent vehicles as needed. The variable cost of renting is $700 per family served. Will this suggestion help Greg reach the break-even point sooner?
Q: Assume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn…
A: The companies make their make or buy decisions based on comparative analysis of total costs incurred…
Q: Kathleen Taylor is a high school student who has been investigating the possibility of mowing lawns…
A: The cost volume profit analysis or CVP analysis is used for the purpose of determining the effect on…
Q: Assume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn…
A: Assume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn…
Q: A restaurant owner is trying to decide between two different garbage disposals. A regular steel (RS)…
A: Regular Steel Initial Cost = 3500 N = 4 years Maintenance Cost at end of second year = 100…
Q: Angelus Press is considering replacing all of its old cash registers with new ones. The old…
A: Note: Hi! Thank you for the question, As per the honor code, we are allowed to answer three…
Q: Mimi's Fixtures manufactures kitchen tiles in one plant, which has a practical capacity of 30,000…
A: Cost: Cost is the summation of all expenditures which is related to the conversion of raw material…
Q: “I’m not sure we should lay out $315,000 for that automated welding machine,” said Jim Alder,…
A: Since we only answer up to 3 sub-parts, we’ll answer the parts 1, 2a and 2b of this question. Please…
Q: The Knot manufactures men’s neckwear at its Spartanburg plant. The Knot is considering implementing…
A: Just-in-time (JIT) manufacturing system: Just-in-time manufacturing system is an approach to…
Q: Camille Company operates a chain of retail paint stores. Although the paint is sold under the…
A: Contribution margin per gallon =Selling price per gallon -Variable cost per gallon=P 100 -P 70=P…
Q: I’m not sure we should lay out $265,000 for that automated welding machine,” said Jim Alder,…
A: 1) Particular Amount ($) Reduction in labor costs 105,000 Reduction in material waste 6,600…
Q: Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For…
A: “Since you have asked multiple questions, we will solve the first three sub-parts question for you.…
Q: 1. Compute the payback period for the new equipment. Round your answer to two decimal places. fill…
A: Payback period is the period within which the sum invested by the company in a project will be…
Q: Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For…
A: 4. Following are the computation of customer margin earned:
Q: Alderon Enterprises is evaluating a special order it has received for a ceramic fixture to be used…
A: Definition: Cost: The amount paid to purchase the asset, install it, and put it into operations, is…
Q: "In my opinion, we ought to stop making our own drums and accept that outside supplier's offer,"…
A: Financial Advantage/(Disadvantage)=Total relevant cost of making-Cost of purchase
Q: Tate Inc. and Booth Inc. are two small manufacturing companies that are considering leasing a…
A:
Q: A dress manufacturer, Prissy Candy, has fallen on hard times and wants to break-even with it's most…
A: Break even = Fixed cost / Contribution per unit Contribution per unit = Selling price - Variable…
Q: Greg Morrison recently graduated from mortuary school. He is considering opening his own funeral…
A: Break-Even Point: It is the point where the company is at zero profit. It is where the company is…
Q: Paul White is a young entrepreneur preparing to start a company that will sell floating lounge…
A: Formula: Units to be sold = ( Target profit + Fixed costs ) / contribution margin per unit…
Q: I’m not sure we should lay out $355,000 for that automated welding machine,” said Jim Alder,…
A: In finance, the net present value (NPV) applies to an arrangement of cash flows happening at…
Q: Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could…
A: Make cost is the cost to produce the product. Buy cost is the cost of purchasing or buying the…
Q: Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For…
A: Manufacturing overhead: It is the indirect cost incurred as a part of manufacturing the products.…
Q: he wishes to know what the annual cost, at the economic life, will be for a van with the following…
A: The annual cost analysis helps an organization to evaluate the life cycle of a project. The…
Q: Greg Morrison recently graduated from mortuary school. He is considering opening his own funeral…
A: Contribution is - Sales - Variables Cost Contribution = $ 6000- $ 1200- $ 4800
Q: Tate Inc. and Booth Inc. are two small manufacturing companies that are considering leasing a…
A:
Q: Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For…
A: Activity based costing (ABC) is the costing method which allocates the overheads on the basis of…
Q: Natalie is thinking of buying a van that will be used only for business. The cost of the van is…
A: since you have posted question with multiple sub parts. we will be solving first three subparts for…
Q: The Knot manufactures men’s neckwear at its Spartanburg plant. The Knot is considering implementing…
A: JIT or just-in-time is a stock administration technique in which material, labor and products (to be…
Q: Janelle Heinke, the owner of Ha'Peppas!, is considering a new oven in which to bake the firm's…
A: Variable cost means the cost which vary with the level of output and fixed cost means the cost which…
Q: You are trying to pick the least-expensive equipment for your manufacturing operations. You have…
A: It is the annual cost of owning and maintaining the asset which is determined by dividing the net…
Q: Juanita is planning to make fancy, multi-tiered wedding cakes for the next wedding season. To make…
A: The contribution margin is the total amount of profits and fixed costs for an entity which is used…
Q: You are trying to pick the least-expensive equipment for your manufacturing operations. You have two…
A: Cost of capital = 10% Year Hi-Quality CFs Lo-Quality CFs 0 $ -40,000.00 $ -20,000.00 1…
Q: Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For…
A: Note: Since we are entitled to answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit…
Q: Natalie is also thinking of buying a van that will be used only for business. The cost of the van is…
A: Depreciation is a charge on the asset. It means that portion of asset has been used during the year.…
Q: You are trying to pick the least-expensive equipment for your manufacturing operations. You have two…
A: To take the valuing decision between the two alternatives that have a different useful life, it is…
Q: The Knot manufactures men’s neckwear at its Spartanburg plant. The Knot is considering implementing…
A:
Q: Natalie is thinking of buying a van that will be used only for business. The cost of the van is…
A: Depreciation means decline in the estimation of benefit inside its valuable life because of mileage…
Q: The management of a private hospital is considering automating some back office functions. This…
A: Net Present Value (NPV) refers to the difference between the present value of cash inflows and cash…
Q: A new restaurant has recently opened in your community and it is a huge success with an average of…
A: In order to make a decision about whether or not to purchase the dish-washing machine, we need to…
Q: The management of a private hospital is considering the installation of an automatic telephone…
A: Ans: If the company removes the current system of operation the amount it can save per annum can be…
Q: Dr. Gulakowicz is an orthodontist. She estimates that adding two new chairs will increase fixed…
A: The Break-even point indicates the level of sales where the total cost is equal to total sales. It…
Q: "In my opinion, we ought to stop making our own drums and accept that outside supplier's offer,"…
A: In make or buy decision we evaluate both costs , making in our own plant and buying from…
Q: Waterways has discovered that a small fitting it now manufactures at a unit cost of $1.00 could be…
A: Working Note: Purchasing Cost = No. of units needed x Purchasing Cost per unit = 465,000 units x…
Q: Assume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn…
A: Assume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn…
Q: “I’m not sure we should lay out $375,000 for that automated welding machine,” said Jim Alder,…
A: Net Present Value: It refers to the excess of the present value of inflows over the present value of…
Q: Kobe Company has manufactured 200 partially finished cabinets at a cost of $102,000. These can be…
A: Incremental income = Incremental Sales revenue – Incremental costs
Q: Greg Morrison recently graduated from mortuary school. He is considering opening his own funeral…
A:
Q: Waterways has discovered that a small fitting it now manufactures at a unit cost of $1.00 could be…
A: Opportunity cost refers to that cost which is saved in case one alternative is selected over the…
Q: Mighty Safe Fire Alarm is currently buying 57,000 motherboards from MotherBoard, Inc. at a price of…
A: Comparing the cost in both cases i.e buy and make and whose cost is less and increase the profit…
| Greg Morrison recently graduated from mortuary school. He is considering opening his own funeral home. A funeral home is a high-fixed cost business, as it requires considerable expenditures for facilities, labor, and equipment, no matter how many families are served. Assume the annual fixed cost of operations is $800,000. Further assume that the only significant variable cost relates to burial containers like urns and caskets. An average casket costs $1,200. Greg's banker has asked a variety of questions in contemplation of providing a loan for this business. |
| The banker has suggested that Greg can reduce his fixed costs by $150,000 if he will not buy any vehicles. Greg can instead rent vehicles as needed. The variable cost of renting is $700 per family served. Will this suggestion help Greg reach the break-even point sooner? |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufacturessophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which isprivately owned, has approached a bank for a loan to help it finance its growth. The bank requires financialstatements before approving such a loan. You have been asked to help prepare the financial statements andwere given the following list of costs:1. Depreciation on salespersons’ cars.2. Rent on equipment used in the factory.3. Lubricants used for machine maintenance.4. Salaries of personnel who work in the finished goods warehouse.5. Soap and paper towels used by factory workers at the end of a shift.6. Factory supervisors’ salaries.7. Heat, water, and power consumed in the factory.8. Materials used for boxing products for shipment overseas. (Units are not normally boxed.)9. Advertising costs.10. Workers’ compensation insurance for factory employees.11. Depreciation on chairs…Suppose that you have been given a summer job as an intern at Issac Aircams, a company that man- ufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before approving such a loan. You have been asked to help prepare the financial statements and were given the following list of costs: Depreciation on salespersons’ cars. Rent on equipment used in the factory. Lubricants used for machine maintenance. Salaries of personnel who work in the finished goods warehouse. Soap and paper towels used by factory workers at the end of a shift. Factory supervisors’ salaries. Heat, water, and power consumed in the factory. Materials used for boxing products for shipment overseas. (Units are not normally boxed.) Advertising costs. Workers’ compensation insurance for factory employees. Depreciation on…Billy Bob just paid cash for a run-down bed & breakfast in upstate New York. He plans to refurbish it and then start a heavy duty marketing campaign to bring in the tourists. Your task is to help him figure out how many rooms he has to rent each night to break even. Here are the key assumptions you will need to complete the analysis: -Billy Bob’s cost of just keeping the B & B open for business in $500.00 per day. (Rent and Utilities) -He has 10 rooms available to rent. -He calculates the variable cost of renting a room to be $20.00. (Maid Service, towel and sheet cleaning) -He figures he can rent a room for $125.00 per night. 1. Assuming he rents all 10 rooms, what is Billy-Bob's total fixed cost per day. (Remember fixed cost is the cost that doesn’t vary with sales or production.) 2. Assuming Billy Bob rents all 10 rooms, what is his variable cost for the day? (Remember variable costs changes with sales and production). 3. What is Billy Bob’s total cost for the day when he…
- A local waste management company needs to purchase a new garbage truck. The company has two truck models under consideration. The purchase price for Model A is $90, 000. The maintenance and operation costs are $10,000/year. Model B is less expensive to acquire ($60,000 at purchase), but costs more on operation and maintenance. Details of the costs are shown in the table below. Interest rate is 4%. Please help this company to decide which truck they should purchase. Year Model A Truck Model B Truck Purchase Price (beginning of year) $90,000 $60,000 Annual Operation and Maintenance (end of year) 1 $10,000 $20,000 2 $10,000 $20,000 3 $10,000 $20,000 4 $10,000 $20,000 Calculate the present values of total costs for Model A Truck and Model B Truck, respectively. (Interest rate: 4%) *Results round to the nearest 2 decimal places. (Note: you may consider using an Excel…Natalie is thinking of buying a van that will be used only for business. The cost of the van is estimated at $36,500. Natalie would spend an additional $2,500 to have the van painted. In addition, she wants the back seat of the van removed so that she will have lots of room to transport her mixer inventory as well as her baking supplies. The cost of taking out the back seat and installing shelving units is estimated at $1,500. She expects the van to last about 5 years, and she expects to drive it for 200,000 miles. The annual cost of vehicle insurance will be $2,400. Natalie estimates that at the end of the 5-year useful life the van will sell for $7,500. Assume that she will buy the van on August 15, 2023, and it will be ready for use on September 1, 2023. Natalie is concerned about the impact of the van’s cost on her income statement and balance sheet. She has come to you for advice on calculating the van’s depreciation. Instructions (a) Determine the cost of the van. (b) Prepare…Natalie is thinking of buying a van that will be used only for business. The cost of the van is estimated at $36,500. Natalie would spend an additional $2,500 to have the van painted. In addition, she wants the back seat of the van removed so that she will have lots of room to transport her mixer inventory as well as her baking supplies. The cost of taking out the back seat and installing shelving units is estimated at $1,500. She expects the van to last about 5 years, and she expects to drive it for 200,000 miles. The annual cost of vehicle insurance will be $2,400. Natalie estimates that at the end of the 5-year useful life the van will sell for $7,500. Assume that she will buy the van on August 15, 2023, and it will be ready for use on September 1, 2023. Natalie is concerned about the impact of the van’s cost on her income statement and balance sheet. She has come to you for advice on calculating the van’s depreciation. Instructions (a) Determine the cost of the van. (b) Prepare…
- An automated car wash called Jet Express outside a large Texas city on the beltway is deciding whether to build and install one dedicated vehicle wash line or have two parallel wash lines. There are no other car washes at this intersection and there will be none because all the land is developed. The second line allows for some economies of scale in total cost. The monthly fixed cost of one wash line is $13,500 per month or $162,000 per year. This includes the mortgage payment, taxes on the building, and wash equipment. The variable cost for this single line is $15 per vehicle. The fixed cost for two wash lines is $26,000 per month or $312,000 per year, and the variable cost to operate two lines is $12 per vehicle because some wash crews can work both lines. The price of the average interior and exterior car wash is $27. Use the Excel template Break-Even in MindTap to answer the following questions: What is the break-even quantity for one and two automated wash line? Round your…A company is trying to decide whether to buy a new delivery truck to replace their old one. The old truck originally cost $32,000. The new truck will cost $45,000. If they buy the new truck, they will sell the old truck to a used truck dealer for $4,000. Based on the information given, what is the immediate total incremental cost or benefit of buying the new truck? (Indicate a net benefit as a positive number and a net cost as a negative number.)Lisa is a contractor, and she owns a small home renovation company that specializes in kitchen renovations. Lisa fears she has been underbidding her projects, and that translates into lost profits that could help sustain her through slow periods. She is putting together an estimate for a potential client and has determined the following activities: Activity Demo of Existing Space Cabinet Installation Countertop Installation Final bid price Cost Driver $ Square Footage # of Hours Square Footage Rate $3.26 /square foot $205 /hour $12.00 /square foot Estimated Use for Job 520 square feet 8 hours Previously, Lisa was billing at a flat rate of $16 per square foot of the demo space with no additional markup. Lisa would like to add a 20% markup to the cost to arrive at the final bid price. Using Activity-Based Costing (ABC), what is the final bid price for her potential customer? (Round intermediate calculations and final answ to 2 decimal places, e.g. 25,000.25.) 280 square feet
- Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?Kaleo has made up his mind—he wants a pool in the family’s backyard! He figures his kids and spouse will be thrilled. However, to cover the cost of the pool, they’ll have to pack up and live away from home for a few weeks during the summer to rent their home to vacationers. He crunched the numbers based on the following estimates. 1. Cost of pool/installation $50,000 2. Life of the pool (no salvage value) 20 years 3. Annual net cash inflows from renting (net of cash expenses for renting and pool maintenance) $6,500 4. Tax rate 23% 5. Average rate of return 8% Kaleo’s daughter, Sarah, found the above information written on a sheet of paper in his office, along with the following notes. “This is a no-brainer! We’ll recover the cost of this pool in just 7 years, even though we plan to live here until we’re old and gray, or at least as long as the pool hangs on. If we can rent our house out for just 3 weeks each year, it’ll be almost pure profit that we can put toward paying off…Charlie Brown is thinking about starting Wing-It Airlines to fly a commuter route in and out of a major city. Four planes are on the market that will do the job, but each has different flight, load, and operating characteristics. Charlie is unsure of the demand for his service, and feels that it may depend to some extent on the type of plane chosen. Whether or not the business is feasible may depend on which airplane is used in conjunction with the demand estimate assumed. Are capital budgeting techniques appropriate for analysis of this problem? If so, is the issue a stand-alone or mutually exclusive decision?