This means that the production for January would be the difference in the current month expected sales and the closing inventory from December. Additionally, in January, the units will be produced for February to maintain the “50% of next month expected sales” inventory level. The schedule for raw material use is derived from the production schedule. Blackheath has a policy of keeping at least enough raw material for 700 units in the closing inventory. It is assumed that in order to keep the storage and maintenance cost at the minimum, a minimum inventory for 700 units is maintained.
Inspection is estimated to be 3% of (labor) cost based on past experience = 258.60 9. General and Administrative expenses are estimated to be 5% of the total of (equipment / material) and (labor) based on past experience. = 3990.50 Note: For this problem, only items 5 and 6 are considered "labor" for the purpose of calculating items 8 and 9. Check answer: Total project cost = $94,737.60 2-2 Three-point Estimate Problem (a) A project requires the use of structural steel in several tasks over the 12 month period expected to complete the work. Based on recent experience the most likely price for the material is $0.30/lb.
This choice does, however, affect how individual shareholders’ accounts are reported in the balance sheet. Formally retiring shares restores the balances in both the common stock account and paid-in capital - excess of par to how those balances would have looked if the shares never had been issued. Any net increase in assets produced from the sale and ensuing repurchase is reflected as Paid-in capital—share repurchase. On the other hand, any net decrease in assets resulting from the sale and subsequent repurchase is repeated as a subtraction of retained earnings. Inversely, when a share repurchase is seen as treasury stock, the cost of the treasury stock is naturally disclosed as a decrease in total shareholders’ equity.
The team’s manpower level was constant at 2,080 hours/month with each person incurring a cost of $60.00/hr., fully burdened. At the end of June, with 4 months remaining, Scott Corporation informed Park Industries that due to cash-flow problem, follow-on work will not be rewarded until March 1988. Jerry is now worried that he would have to break up the project team after the Scott project is done and he will not be able to get the same people for the upcoming projects. Good project office personnel are always in demand. Jerry estimated that he needed $40,000/month during the “bathtub” period to support and maintain his key people.
Honors Biology Final Lab Report June 9 2009 Problem: How does caffeine affect your heart rate? Hypothesis: Caffeine, as a stimulus would act to raise the resting heart rate. Approximately two bpm rise per mg per oz. Of caffeine. Procedure: • Gather a test group of 15 people who have not done any strenuous activity in previous hour, also no caffeine for 8 hours (to get resting heart rate).
Problems The contract with Pilgrim was important for Febritek because once the quality and performance were satisfied, larger and more permanent contract were likely to follow. The contract required shipments of 650 units each Friday, starting January 31. At the beginning, everything went well and at pace of 135% of standard. At this pace, all the work could be completed and shipped on schedule. However, after two deliveries had been made, one operator was injured during work and could not come back to work for several months.
EVA was defined by Stewart as Net operating profit after taxes (NOPAT) subtracted with a capital charge. Basically, EVA measures wither shareholders earned enough return to compensate the risk taken. The idea is that value is created when the return on the firm's economic capital employed is greater than the cost of that capital. EVA = NOPAT – CAPITAL COST EVA = NOPAT – COST OF CAPITAL x CAPITAL employed EVA = (RATE OF RETURN – COST OF CAPITAL) x CAPITAL Where: 1. Rate of return = Nopat/Capital 2.
This method is superior to the book value method since it is forward looking. It also takes into account future value creation, as well as for uncertainties in the industry and macroeconomic factors. Alternative methods are the EBITDA multiple and the Value-Driver Formula. The EBITDA multiple applies today’s value to future EBITDA. This method could be misleading, as it accounts for growth twice.
The volume is a constant which is assumed at 80% in the analysis of the price. On the other hand, informing the price-flex the price decreases would be the variablecosts, which can easily be reduced for the benefit of the company. In this worst and base case, ten percent decreases and this same percent remain for all the prices effectively. These are the main changes in both the methods of the pricing strategy. Furthermore, there is a need to increase the price by 6% to maintain the company’s original profit potential over the increase of cost.
Everything being equal, the WACC of a firm increases as the beta and rate of return on equity increases, as an increase in WACC means a decrease in valuation and a higher risk. A firms WACC is a very important both to the stock market for stock valuation purposes and to the company's management for capital budgeting purposes. In an analysis of a potential investment by the company, investment projects that have an expected return that is greater than the company's WACC will generate additional free cash flow and create positive NPV for stockholders. Since the WACC is the minimum rate of return required, the managers in the company should invest in the projects that generate returns in excess of the WACC. WACC is set by the investors (or markets), not by managers.