Answer:
1. In a Year 20,367 20,017
2. In a Year 21,333 21,917
3. In the case of NPW analysis Selected Target is best option because it is the better and cheaper investment while EUAM analysis states Walmart kit is better option,
4.Target is the best option because the cost difference is only around $600 which will last for 6 Years while in walmart case we will need to replace all the furniture in 3 Years .
Explanation:
1. Using NPW Analysis
Walmart Kit Target
Intial Cost 40000 65000
AMC 10000 12000
Salvage Value 12000 25000
Life Years 3 6
Total Cost
Intial Cost 40000 65000
Less Salvage 12000 25000
Balance 28000 40000
5% Interest 6000 19500
AMC PV 2.71 5.05
Amc 27100 60600
Total Cost 61100 120100
In a Year 20,367 20,017
2. Using EUAW Analysis
Walmart Kit
Target
Intial Cost 40000 65000
AMC 10000 12000
Salvage Value 12000 25000
Life Years 3 6
Total Cost
Intial Cost 40000 65000
Less Salvage 12000 25000
Balance 28000 40000
5% Interest 6000 19500
AMC 30000 72000
Total 64000 131500
In a Year 21,333 21,917
In the case of NPW analysis Selected Target is best option because it is the better and cheaper investment while EUAM analysis states Walmart kit is better option,
Target is the best option because the cost difference is only around $600 which will last for 6 Years while in walmart case we will need to replace all the furniture in 3 Years .
Hence Target product will be the best option we would advice the management to go for.
To determine which kitchen kit to choose, you can use NPW (Net Present Worth) analysis and EUAW (Equivalent Uniform Annual Worth) analysis. In NPW analysis, calculate the present worth of each option by subtracting the present value of the annual maintenance cost from the sum of the present value of the salvage value and the present value of the first cost. In EUAW analysis, divide the NPW by the present worth factor to calculate the equivalent uniform annual worth. You can extend the analysis to show the EUAW for an extended life of the products. Present the information ethically and transparently, addressing your bias towards the Target kit and presenting the analysis results objectively.
a. In order to determine which kitchen kit to choose using NPW analysis, we need to calculate the present worth of each option. The present worth is calculated by subtracting the present value of the annual maintenance cost from the sum of the present value of the salvage value and the present value of the first cost. You can use the formula: NPW = (-FC + PV(SV) + PV(AMC)) / (1 + i)^n, where FC is the first cost, PV(SV) is the present value of the salvage value, PV(AMC) is the present value of the annual maintenance cost, i is the interest rate, and n is the number of years.
b. To determine which kitchen kit to choose using EUAW analysis, we need to calculate the equivalent uniform annual worth of each option. The EUAW is calculated by dividing the NPW by the present worth factor. You can use the formula: EUAW = NPW / Present Worth Factor, where NPW is the net present worth, and the Present Worth Factor is calculated using the formula: Present Worth Factor = (1 - (1 + i)^-n) / i.
c. To show that the Target option is the better choice, you can extend the analysis from part b and calculate the EUAW for an extended life of the products. Simply substitute the new number of years into the formula and compare the EUAWs of the two options.
d. Since you have a bias towards the Target kit, it is important to present the information ethically and transparently. You can start by explaining your bias and personal preference, and then present the analysis results objectively, showcasing the financial aspects and consequences of each option. It is crucial to provide all the necessary information and allow management to make an informed decision based on the facts presented.
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B secondary question
C turn-taking question
D primary question
a. The wages and utility bills that Charles pays
b. The wholesale cost for the guitars that Charles pays the manufacturer
c. The rental income Charles could receive if he chose to rent out his showroom
d. The salary Charles could earn if he worked as a financial advisor
Answer:
Explanation:
Explicit Costs refers to costs that involve an immediate outlay of cash from the business and it is recorded and reported to the management.
Implicit Cost refer to the cost which the company had foregone while employing the alternative course of action and is neither recorded nor reported to the management of the company.
a. The wages and utility bills that Charles pays
Identification: Explicit Cost
b. The wholesale cost for the guitars that Charles pays the manufacturer
Identification: Explicit Cost
c. The rental income Charles could receive if he chose to rent out his showroom
Identification: Implicit Cost
d. The salary Charles could earn if he worked as a financial advisor
Identification: Implicit Cost
Analyze the inventory accounts to determine:
1. Cost of raw materials purchased during the year.
2. Cost of goods manufactured for the year.
3. Cost of goods sold for the year.
4. Cost of raw materials purchased during the year.
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
True Fit incurred total manufacturing costs of $24.500.000. Of this amount. $3,000,000 was direct materials used and $16, 800,000 was direct labor. Beginning balances for the year were Raw Materials Inventory. $900,000. Work-in-Process Inventory. $600,000; and Finished Goods Inventory. $1, 300,000. At the end of the year, balances were Raw Materials inventory. $800,000; Work-in-Process Inventory. $1, 700,000; and Finished Goods inventory. $390,000.
1) Raw material used= beginning inventory + purchases - ending inventory
3,000,000= 900,000 + purchases - 800,000
2,900,000= purchases
2) cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 600,000 + 24,500,000 - 1,700,000= $23,400,000
3) COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 1,300,000 + 23,400,000 - 390,000= $24,310,000
B) $112,000.
C) $90,000.
D) $107,200.
Answer:
C) $90,000
Explanation:
Beginning PBO = Interest cost/Discount rate =
Beginning PBO = $7,200/8%
Beginning PBO = $90,000
Answer:
The net realizable value of Miller's receivables at the end of Year 2 was: $42,010
Explanation:
Open a Trade Receivable Account as follows :
Debits :
Revenue $133,000
Totals $133,000
Credits:
Cash $87,000
Balance $46,000
Totals $133,000
Note that Allowance for Doubtful debts is estimated at 3% of the Company`s Sales on Account
Allowance for Doubtful debts = $133,000 × 3%
= $ 3, 990
Net realizable value of Miller's receivables
Trade Receivable Balance $46,000
Less Allowance for Doubtful Debts $3,990
Trade Receivables $42,010
The net realizable value of Miller Company's receivables at the end of Year 2 is calculated by estimating bad debt and subtracting it from the ending accounts receivable. The estimated bad debt is 3% of sales, leading to a net realizable value of $42,010.
The question revolves around calculating the net realizable value of accounts receivable for the Miller Company at the end of Year 2. First, we need to calculate the estimated bad debt. The company estimates that 3% of its sales on account will be uncollectible, which equates to $133,000 * 0.03 = $3,990. After subtracting the cash collected from receivables, $133,000 - $87,000, we get ending accounts receivable of $46,000. Finally, we deduct the estimated bad debts from ending accounts receivable to obtain the net realizable value, which is $46,000 - $3,990 = $42,010.
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