82.
The Pan American Bottling Co. is considering the purchase of anew machine that would increase the speed of bottling and savemoney. The net cost of this machine is $57,000. The annual cashflows have the following projections. Use Appendix B and Appendix Dfor an approximate answer but calculate your final answer using theformula and financial calculator methods.
Year Cash Flow 1 $ 21,000 2 24,000 3 28,000 4 14,000 5 9,000
a. If the cost of capital is 11 percent, what isthe net present value of selecting a new machine? (Do notround intermediate calculations and round your final answer to 2decimal places.)
b. What is the internal rate of return?(Do not round intermediate calculations. Enter your answeras a percent rounded to 2 decimal places.)
28.
The Bradley Corporation produces a product with the followingcosts as of July 1, 20X1:
Material $1per unit Labor 3 per unit Overhead 2 per unit
Beginning inventory at these costs on July 1 was 3,050 units.From July 1 to December 1, 20X1, Bradley produced 12,100 units.These units had a material cost of $2, labor of $4, and overhead of$2 per unit. Bradley uses LIFO inventory accounting.
a. Assuming that Bradley sold 13,200 unitsduring the last six months of the year at $13 each, what is itsgross profit?
b. What is the value of ending inventory?
30.
The Denver Corporation has forecast the following sales for thefirst seven months of the year:
January $ 22,000 May $ 22,000 February 24,000 June 28,000 March 26,000 July 30,000 April 32,000
Monthly material purchases are set equal to 25 percent offorecast sales for the next month. Of the total material costs, 35percent are paid in the month of purchase and 65 percent in thefollowing month. Labor costs will run $5,200 per month, and fixedoverhead is $8,000 per month. Interest payments on the debt will be$4,200 for both March and June. Finally, the Denver salesforce willreceive a 1.50 percent commission on total sales for the first sixmonths of the year, to be paid on June 30.
Prepare a monthly summary of cash payments for the six-month periodfrom January through June. (Note: Compute prior December purchasesto help get total material payments for January.)
82.
The Pan American Bottling Co. is considering the purchase of anew machine that would increase the speed of bottling and savemoney. The net cost of this machine is $57,000. The annual cashflows have the following projections. Use Appendix B and Appendix Dfor an approximate answer but calculate your final answer using theformula and financial calculator methods.
| Year | Cash Flow | ||
| 1 | $ | 21,000 | |
| 2 | 24,000 | ||
| 3 | 28,000 | ||
| 4 | 14,000 | ||
| 5 | 9,000 | ||
a. If the cost of capital is 11 percent, what isthe net present value of selecting a new machine? (Do notround intermediate calculations and round your final answer to 2decimal places.)
b. What is the internal rate of return?(Do not round intermediate calculations. Enter your answeras a percent rounded to 2 decimal places.)
28. |
The Bradley Corporation produces a product with the followingcosts as of July 1, 20X1:
| Material | $1per unit |
| Labor | 3 per unit |
| Overhead | 2 per unit |
Beginning inventory at these costs on July 1 was 3,050 units.From July 1 to December 1, 20X1, Bradley produced 12,100 units.These units had a material cost of $2, labor of $4, and overhead of$2 per unit. Bradley uses LIFO inventory accounting.
a. Assuming that Bradley sold 13,200 unitsduring the last six months of the year at $13 each, what is itsgross profit?
b. What is the value of ending inventory?
30.
The Denver Corporation has forecast the following sales for thefirst seven months of the year:
| January | $ | 22,000 | May | $ | 22,000 |
| February | 24,000 | June | 28,000 | ||
| March | 26,000 | July | 30,000 | ||
| April | 32,000 | ||||
Monthly material purchases are set equal to 25 percent offorecast sales for the next month. Of the total material costs, 35percent are paid in the month of purchase and 65 percent in thefollowing month. Labor costs will run $5,200 per month, and fixedoverhead is $8,000 per month. Interest payments on the debt will be$4,200 for both March and June. Finally, the Denver salesforce willreceive a 1.50 percent commission on total sales for the first sixmonths of the year, to be paid on June 30.
Prepare a monthly summary of cash payments for the six-month periodfrom January through June. (Note: Compute prior December purchasesto help get total material payments for January.)
Related questions
Iguana, Inc., manufactures bamboo picture frames that sell for$30 each. Each frame requires 4 linear feet of bamboo, which costs$2.50 per foot. Each frame takes approximately 30 minutes to build,and the labor rate averages $12 per hour. Iguana has the followinginventory policies: |
| Ending finishedgoods inventory should be 40 percent of next monthâs sales. |
| Ending rawmaterials inventory should be 30 percent of next monthâsproduction. |
| Expected unit sales (frames) forthe upcoming months follow: |
| March | 280 |
| April | 260 |
| May | 310 |
| June | 410 |
| July | 385 |
| August | 435 |
Variable manufacturing overhead is incurred at a rate of $0.40per unit produced. Annual fixed manufacturing overhead is estimatedto be $7,800 ($650 per month) for expected production of 3,000units for the year. Selling and administrative expenses areestimated at $700 per month plus $0.50 per unit sold. |
Iguana, Inc., had $10,900 cash onhand on April 1. Of its sales, 80 percent is in cash. Of the creditsales, 50 percent is collected during the month of the sale, and 50percent is collected during the month following the sale. |
Of raw materials purchases,80 percent is paid for during the month purchased and 20 percent ispaid in the following month. Raw materials purchases for March 1totaled $2,500. All other operating costs are paid during the monthincurred. Monthly fixed manufacturing overhead includes $160 indepreciation. During April, Iguana plans to pay $3,100 for a pieceof equipment. |
Required information
| Required: | |
| 1. | Compute the budgeted cash receipts for Iguana. (Roundyour answer to 2 decimal places.) |
| april | may | june | 2nd quater total | |
| budgeted cash receipts |
| 2. | Compute the budgeted cash payments for Iguana. (Do notround your intermediate calculations. Round final answers to 2decimal places.) |
| april | may | june | 2nd quarter total | |
| budgeted cash payments |
| 3. | Prepare the cash budget for Iguana. Assume the company canborrow in increments of $1,000 to maintain a $10,000 minimum cashbalance. (Round your answers to 2 decimalplaces.) |
| april | may | june | 2nd quarter total | |
| begining cash balance | ||||
| plus: budgeted cashreceipts | ||||
| less: budgeted cashpayments | ||||
| preliminary cash balance | ||||
| cash borrowed / repaid |
| ending cash balance |
