The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A $ Machine B $ 0 40,000.00 50,000.00
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The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs:
Year |
Machine A $ |
Machine B $ |
0 |
40,000.00 |
50,000.00 |
1 |
10,000.00 |
8,000.00 |
2 |
10,000.00 |
8,000.00 |
3 |
10,000.00 + replacement |
8,000.00 |
4 |
|
8,000.00 + replacement |
These costs are expressed in real terms.
1. Suppose you are Borstal’s
2. Which machines should Borstal buy?
3. Suppose you actually do buy one of the machines and rent it to the production manager. How much would you actually have to charge in each future year if there is steady 8% per year inflation?
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- The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A 0 OLN3+ 1 2 4 $48,000 11,600 11,600 11,600 + replace Machine A Machine B These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 12% real discount rate and ignore taxes. (Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places.) Machine B $58,000 11,200 11, 200 11,200 11,200 + replace Annual Rental PaymentThe Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A Machine B 0 $ 49,000 $ 59,000 1 11,800 11,600 2 11,800 11,600 3 11,800+ replace 11,600 4 11,600 replace These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 12% real discount rate and ignore taxes. Note: Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places. b. Which machine should Borstal buy? c. If there is steady 6% per year inflation, what will be the annual rental payment for machine B for the second year? Note: Enter your answer as a positive value rounded to 2 decimal places. a. Machine A a. Machine B b. Which machine should Borstal buy? c. Year 2 rental…The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A $48,000 11,600 11,600 11,600+ replace OLZ3+ 0 1 2 4 Machine A Machine B Machine B $58,000 Annual Rental Payment 11, 200 11, 200 These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 12% real discount rate and ignore taxes. (Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places.) 11,200 11,200 replace
- The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A 0 1 2 3 4 $46,000 11, 200 11,200 11,200 replace Machine A Machine B Machine B $56,000 These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 8% real discount rate and ignore taxes. (Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places.) $ 29,029.46 x $ 27,318.43 x 10,400 10,400 > Answer is complete but not entirely correct. Annual Rental Payment 10,400 10,400 replace O Machine A Machine B b. Which machine should Borstal buy? c. If there is steady 4% per year inflation, what will be the annual rental payment for machine B for the second year? (Enter your answer as a…The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A Machine B $51,000 0 $41,000 1 10,200 8,400 2 10,200 8,400 3 10,200+ replace 8,400 4 8,400 + replace These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 8% real discount rate and ignore taxes. (Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places.) Answer is complete but not entirely correct. Annual Rental Payment Machine A $ 25,108.00 Machine B $ 24,561.00 > b. Which machine should Borstal buy? Machine A Machine BThe cost of building an automated assembly line in a factory is P700,000; a manually operated assembly line would cost P250,000. What economic term is used to describe the P450,000 variation between these two amounts? Differential cost Sunk cost Marginal cost Out of pocket cost
- X Ltd. wants to replace one of its old machines. Three alternative machines namely M1, M2 and M3 are under its consideration. The costs associated with these machines are as under: M, M2 M3 Direct material cost p.u. 50 100 150 Direct labour cost p.u. 40 70 200 Variable overhead p.u. 10 30 50 Fixed cost p.a. 2,50,000 1,50,000 70,000 Compute the cost indifference points for these altematives.Daily Kneads, Inc., is considering outsourcing one of its many products rather than making it internally. The supplier will charge $20,000 for 20,000 pounds of the product. The costs per pound to make this product include: Cost per Pound $0.30 Direct Labor Direct Materials $0.60 $0.70 Allocated Unavoidable Overhead If Daily Kneads outsources, what is the savings (or loss) per pound for the company as a whole? If the amount is a loss include a negative sign (not parentheses) in your answer. "_"In a manufacturing casting factory, a new machine is needed for casting machines. There are two types of machines on the market that will do the same job. The information is as follows. In a manufacturing casting factory, a new machine is needed for casting machines. There are two types of machines on the market that will do the same job. The information is as follows.Machine A machine BSavings to be achieved 370,000 370,000Buying prices 125.000 167.000Scrap values 25,000 35,000Annual operating expenses 8,900 5,200Annual energy cost 40,000 32,000Engine maintenance 7th year 12,000 7,000Economic life 11 years 11 yearsCapital cost 25% 25% Which machine do you prefer? Note:Solve with Net Present Value Method
- The internal manufacturing cost per unit of a component is as follows – Direct Material $5.00 Direct Labour $10.00 Fixed costs $15.00 Total costs $30.00 (a) Given the information above, if the company buys the component, it would however have to pay $17.00, but would still have to meet its fixed cost. Should the company make or buy the component? (b) Based on your answer in (a) above name two factors that can influence the company to buy the product. 2. (a) Describe two (2) methods for allocating support costs to departments. (b) Explain why support costs are allocated to departments. Please answer question 2 thank you very much.The constraint at Rauchwerger Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below: Selling price per unit. Variable cost per unit. Minutes on the constraint WX $335.01 $ 259.60 5.80 KD FS $ 228.29 $ 173.42 $ 199.04 $ 159.95 4.10 3.80 Assume that sufficient time is available on the constrained machine to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the constrained resource? (Round your intermediate calculations to 2 decimal places.)Vaughn, Inc. currently manufactures a wicket as its main product. Costs per unit are as follows: Direct materials and direct labor $11 Variable overhead Fixed overhead Total 5 8 $24 Saran Company has contacted Vaughn with an offer to sell it 6400 wickets for $18 each. Of Vaughn's $8 per unit fixed cost. $5 per unit is unavoidable. Should Vaughn make or buy the wickets and why? O Make because the cost savings is $12800 ◇ Buy because the cost savings is $6400 ○ Buy because the cost savings is $19200 ○ Make because the cost savings is $6400