basis of direct labour hours. The system has been in place with minimum change for 25 years. 1.2 THE CURRENT RISING ISSUE For the past 10 years‚ the company’s pricing has been to set each product’s budgeted price at 110 per cent of its full product cost. Recently‚ however the standard-model motor has come under increasing price pressure from offshore competitors. As a result the price on the standard model has been lowered to $110. The company CEO recently had a discussion with the financial controller
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1. StillWater Mining Company a) Interest Rate 12% Price per ounce $ 1‚500.00 Cost per ounce $ 400.00 Total ounces a year 10‚000 Profit per ounce $ 1‚100 Revenue per year $ 15‚000‚000.00 Cost per year $ 4‚000‚000.00 Profit per year $ 11‚000‚000.00 Every year for the next 10 years‚ the firm earns a profit of $11 Million. The cash flow (in $ Million) is shown below: Year T T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8 T+9 Profit 11 11 11 11 11 11 11 11 11 11 Using NPV formula‚ we find NPV=$62
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following 1. Costs in economics are those things that must be given up in order to have something else. 2. Revenues are the income earned from a firm’s sale of its good or service to consumers in the product market. 3. Profit is the difference between a firm’s total revenues and its total costs. 4. Explicit costs are the monetary payments that firms make to the owners of land‚ labor‚ and capital in the resource market. (i.e. rent‚ wages and interest respectively) 5. Implicit costs refer to
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this is not so. (10 points) This strategy does not consider risk. 3. The NuPress Valet Company has an improved version of its hotel stand. The investment cost is expected to be 72 million dollars and will return 13.50 million dollars for 5 years in net cash flows. The ratio of debt to equity is 1 to 1. The cost of equity is 13%‚ the cost of debt is 9%‚ and the tax rate is 34%. What is the NPV of the project? (10 points) WACC = .5*13+.5*9*(1-.34) = 9.47% PMT = 13‚500‚000‚ i=9.47%‚ n=5‚ PV =
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operation These 6 months is bobbins peak period which means the number will be much worse for the rest of the year There are some one-time costs that will only be incurred in the first year of operations but the amount is still not enough to offset the loss in the following years. Also‚ the tea shop is already operating at a loss even without the fixed costs. Recommendation: Bobbins should not venture into the tea shop business as it will not be profitable for them Wind Turbine Issue: Should
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$113‚800.00 $409‚680.00 $273‚120.00 Variable expense $120‚262.50 $53‚450.00 $192‚420.00 $128‚280.00 Sales commission $- $- $61‚452.00 $40‚968.00 Total CM $135‚787.50 $60‚350.00 $155‚808.00 $103‚872.00 Total fixed expense $94‚333.30 $94‚333.30 $15‚920.00 $15‚920.00 Operating income $41‚454.20 $(33‚983.30) $139‚888.00 $87‚952.00 Based on both qualitative and quantitative analysis‚ Foxy should hire sales representatives in the key fashion
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Professor Bollapragada San Francisco State University Fall‚ 2010 Overview 1. Chapter 10 Case Study: Delivery Strategy at MoonChem a. Annual cost of existing strategy b. Considering different delivery options c. Impact of the proposed recommendation on consignment inventory 2. Chapter 11 Case Study: Managing Inventories at Alko Inc. a. Annual costs b. Savings associated with NDC and recommendations c. Recommendation and evaluation of other distribution systems 1. Chapter 10 Case Study:
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90 Average load factor (percentage of seats filled) 70% Average full passenger fare $ 160 Average variable cost per passenger $ 70 Fixed operating cost per month $3‚150‚000 a. What is the break-even point in passengers and revenues per month? b. What is the break-even point in number of passenger train
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Facility‚ Capacity‚ Planning - MMS I 2 Factors in Heavy Manufacturing Location • • • • • • • Construction costs Land costs Raw material & finished goods shipment modes Proximity to raw materials Utilities Means of waste disposal Labor availability Prof N. Balasubramanian Facility‚ Capacity‚ Planning - MMS I 3 Factors in Light Industry Location • • • – Land costs Transportation costs Proximity to markets depending on delivery requirements including frequency of delivery required by customer
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Name__________________________________ 1. The following information relates to a job cost system in a factory: For the year Estimated Actual Factory Overhead $600‚000 $635‚000 Direct Labor $500‚000 $525‚000 Direct Materials $500‚000 $520‚000 Direct Labor Hours 300‚000 hrs. 290‚000 hrs. The factory uses a predetermined overhead rate per direct labor hour to apply factory overhead. During the year jobs which cost $1‚200‚000 were completed‚ and finished goods costing $1‚000‚000 were
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