Bowen plc has estimated that its overheads will be $250,000 next year if it handles 1,000,000 calls, and $280,000 if it handles 1,250,000 calls. What will its overheads be if it handles 1,100,000 calls?
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- Suppose Gormley can increase the annual capacity of its regular machines by 15,000 machine-hours at a cost of $300,000. Should Gormley increase the capacity of the regular machines by 15,000 machinehours? By how much will Gormley’s operating income increase or decrease? Show your calculationsThe Price Company will produce 55,000 widgets next year. Variable costs will equal 40 percent of sales, while fixed costs will total R110,000. At what price must each widget be sold for the company to achieve an EBIT of R95,000?Harrison Co. expects to sell 200,000 units of its product next year, which would generate total sales of $17 million. Management predicts that pretax net income for next year will be $1,250,000 and that the contribution margin per unit will be $25. Use this information to compute next year’s total expected (a) variable costs and (b) fixed costs.
- The fixed costs within a machine shop are $3.4M annually. The main product this shop produces is priced at $15.00 per unit. Costs for material and labor are $6.50 per unit. What is the annual profit (or loss) if 300,000 units are sold?Venus Robotics can produce 25,000 robots a year on its daytime shift. The fixed manufacturing costs per year are $2.3 million and the total labor cost is $9.5 million. To increase its production to 50,000 robots per year, Venus is considering adding a second shift. The unit labor cost for the second shift would be 15% higher than the day shift, but the total fixed manufacturing costs would increase only to $2.8 million from $2.3 million. (a) Compute the unit manufacturing cost for the daytime shift. (b) Would adding a second shift increase or decrease the unit manufacturing cost at the plant?The Blue Co. will produce 25,000 units of product next year. Variable costs ratio is 70%, while fixed costs will total P85,000. The price of each unit to be sold by the firm to achieve an EBIT of P60,000 is *
- InteliSystems needs 79,000 optical switches next year . By outsourcing them, InteliSystems can use its idle facilities to manufacture another product that will contribute $140,000 to operating income, but none of the fixed costs will be avoidable. Should InteliSystems make or buy the switches? Show your analysis based on the information in the table below for making 70,000 switches.A furniture manufacturer has an annual overhead cost of P100,000 plus 20% of the sales in pesos. Labor costs P20.00 per set and the materials cost P10.00. He has a maximum capacity of 1,000 sets per month, but expects to produce only 8,000 sets per year. If he could sell all what he expects to produce, how much is the selling price of each set just to break even?A company manufactures iron cutting machines. The investment amount made for the machine is 800 thousand TL. Energy costs will increase by 50 thousand and 6% each year. Personnel expenses will increase by 35 thousand and 15 thousand each year, on the other hand, financial expenses will increase by 100 thousand TL and 20% each year. Since it is planned that 250 machines will be manufactured annually, the company has to charge a total cost of TL to the machines manufactured each year for this production with a 12-year life and 30% capital cost, and what will be the cost per unit.
- Acme Inc. has invested $50,000 in a new assembly line. Products produced by the new assembly line are sold for $100 per unit. Fixed annual costs are $10,000 while variable annual costs are $10 per unit. The assembly line will remain in operation for 10 years, after which it will be sold for $15,000. The company has a MARR of 15%. What is the minimum annual production volume required to generate a profit?A machine manufacturer sells each machine for $7,300. The fixed costs are $279,550 per annum, variable costs are $1,500 per machine, and the production capacity is 58 machines in a year. What is break-even as a percent of capacity per annum?The textile factory is being upgraded. The expectation is that labor costs will decrease at an annual rate of 5% while overhead costs will increase at 8%. Now by the end of the first year the Labor costs $2million Material costs $3 million Overhead costs 1.6 million The time value of money rate is 11% and the time horizon is 7 years. Determine the dollar value for each cost category (labor, material, overhead) for each year and the total cost for each year. Determine the present worth of each cost category and the total cost. Determine the annual worth over 7 years that is equivalent to the present worth of the total cost.