Solutions to Week 1 HW Chapter 1 E14. [LO 5]. Incremental revenue per day $2,500 Less incremental costs: Labor $700 Parts 500 Transportation 100 Office staff 200 1,500 Incremental Profit per Day $1,000 Opportunity cost = $1,000 per day 52 days = $52,000 Rent and depreciation do not enter into the calculation of the opportunity cost since these costs are not incremental (they will be incurred whether or not Ken decides to stay open on Saturday). P2. [LO 5 and 6].
3a. What is the shortest loan (36 months, 48 months, 60 months or 72 months) that has a monthly payment within your $500 budget that will allow you to buy the $45,000 car? Answer: Through Bank of America, I found a rate of 2.99% for the 36, 48 and 60 month loans. We are able to put down 20% and will need to finance $36,000. There is no loan period for the $45,000 car that would be under our $500
Operating expenses- total operating expenses had declined in period 8 of $1,273,867 and have had a projection n the budget for period 9 of $1,026,483. This is unrealistic due to the fact that sales were anticipated to increase. The utilities and services have also been duplicated within the budget for operating expenses. It is listed under Facility/General operations cost then under expense. This duplication should be deleted as it is not necessary.
35,000 / 63 = 555.55 556 is break-even point in number of passenger train cars per month. c. If Springfield Express raises its average passenger fare to $ 190, it is estimated that the average load factor will decrease to 60 percent. What will be the monthly break-even point in number of passenger cars? To find the monthly break-even point in number of passenger cars if Springfield Express raises its average passenger fare to $190.00 and the estimation that the average load factor will decrease to 60%, the following calculation is provided: $3,150,000 / $120.000 = $26,250 is the break-even in passengers. 90 / 60% = 54 is the average passenger per car.
In 2013 the couple sold their house for $500,000 and bought a new house for $700,000 in cash. When they sold their house they paid 6% to the real estate agent which in total was $30,000 in fees. They file jointly and had joint ownership of the sold property. Research Issue Is the sale of the home in 2013 made by Mr. Junkiewicz and his wife a taxable transaction? Law and Analysis The taxpayer relief act of 1997 exempted from taxation the profits on the sale of a personal residence of up to $500,000 for married couples filing jointly and $250,000 for singles.
This project will need $3.4 million less than the P04 project and the only component in the investment, which will be more, compared to P04 is the building cost (378 K$). Cannibalization of other store’s sales As the nearest target store closest to the project is 80 miles away, no cannibalization of sales is expected. And this store will generate a sale of $30.5 million in 5 years, which will be almost 2.7 million dollars above expected sales from P04. This store is assumed to take it’s a maximum market share from Walmart in 2008. Store Sensitivities Even if this store has 18.1% lower sales than the forecasted level by R&P, it can achieve the accepted NPV of prototype, besides, construction cost can increase to near $10 million and still the project can achieve the expected NPV of the P04.
The accounts payable at the Fiscal Year End increased by almost 200%. You should as mentioned in the paragraph above use these additional funds to reduce the payables and to be able to take advantage of the accounts from your supplies. Also you purchased items for your inventory with installment payments made available to you from your suppliers. What I recommend is that not to purchase items with an installment plan but to purchase less items and take the discounts by paying for the items within the time period allotted to the discounts. The line of credit at the bank has almost reached
The combined taxes are lower under part b because the majority of the corporation's earnings are only subject to one level of tax (the individual tax on the salary). In part a the taxable income after salary is $200,000 but in part b it is $50,000 since the deduction of $150,000 is taken and this leads to only $50,000 that is taxed twice in part b. 66. [LO 3] In its first year of existence (year 1), Willow Corp. (a C corporation) reported a loss for tax purposes of $30,000. In year 2 it reports a $40,000 loss.
a. Reduction in price will cause the contribution margin to decrease, thus, breakeven point will increase. b. Increase in Direct Labor cost will increase the cost and will cost the contribution margin to decrease, thus, the breakeven point will increase. c. Installation of new ventilating equipment produced depreciation (fixed cost) which will decrease contribution margin, thus the breakeven point will increase.
Willow Company is must reduce its inventory levels and sell inventory at a faster rate to improve the inventory turnover closer to 30 days. Due to the negative cash flow, Willow must explore the opportunity to manage its inventory levels relative to sales. The greater the inventory levels, the higher sales must be, otherwise additional storage and other holding costs will be incurred to cause further deterioration in its cash position. Cash will be invested into unsold inventory that is generating no return while remaining unsold. In addition, there will be the opportunity cost of not having cash available for more useful requirements i.e.