+1-415-670-9189
info@expertsmind.com
Cost-benefit analysis-personal budgeting
Course:- Managerial Accounting
Reference No.:- EM1349658




Assignment Help
Assignment Help >> Managerial Accounting

Here are some of MNO Company's annual costs relating to quality:

* Inspection at the end of the production process: $20,000
* Scrap from the production process: $18,000
* Design work for product improvement: $24,000
* Total costs related to customer complaints: $40,000
* Employee training: $12,000
* Incoming raw material inspection: $10,000

First, classify each of the above as either prevention costs, appraisal costs, internal failure costs, or external failure costs.

Next, suppose that the company has determined that if they increase employee training costs by $15,000, they expect to reduce all failure costs by 20%. Should MNO Company do this? Show your calculations.
Homework Problem 2

Let's see how good you are at budgeting. Determine the total cost of purchasing and owning a car over the next 5 years given the following information and assuming that you will drive it 15,000 miles per year:

1. Purchase price of your new Kia (you are frugal!) is $20,000. You put 20% cash down and finance the rest over five years with total financing costs equaling $2,400. At the end of year 5 you can sell it for $3,500.

2. You live in Massachusetts so your sales tax rate is 5% on the new vehicle (sales taxes are already factored into all of your other costs), your annual registration fees are $100, your annual inspection fees are $60, and your annual excise taxes are expected to average $160.

3. Gasoline is estimated to cost $2.50 per gallon and the car gets an average of 25 miles per gallon.

4. Your annual cost of parking and tolls is $3,000, your annual auto insurance is $2,000, and you can expect at least one minor accident over the next five years with your insurance deductible being $500.

5. Tires cost $100 each and must be replaced every 35,000 miles.

6. Oil changes cost $30 every 3,000 miles. Minor tune-ups are done every 15,000 miles and cost $300 each, including the oil change. Major tune-ups are done every 30,000 miles and cost $600 each, including the oil change and the minor tune-up work.

7. Wheel alignments, brakes and suspension repairs are estimated to be required every 20,000 miles and will cost $250 total.

8. A new battery will be needed every three years at $100.

9. You will have to replace the muffler every 36,000 miles at a cost of $200 each.

10. Other repair work, such as to the electrical system, alternator, windshield wipers, bulbs, etc. is expected to total $750 over the life of the vehicle.

Required: calculate your budgeted cost per mile of purchasing, owning, and driving this vehicle over the five years.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Managerial Accounting) Materials
Determine which products should be produced, and how much of each should be produced, in order to maximize profit contribution - What is the maximum profit contribution? How m
Assuming that Little Louie's borrows to meet short-term cash needs and pays back as soon as surplus cash is available, what will be the company's ending cash balance after fin
The Houston Armadillos, the minor-league baseball team, play their weekly games in small stadium just outside Houston. The stadium holds 10,000 people and tickets sell for $
1.A company has year end cost of goods manufactured of $ 4,000, beginning finished goods inventory of $ 500, and ending finished goods inventory of $ 750. Its cost of goods so
Newroute Manufacturing has been using activity-based costing to determine the cost of produt X-678. One of the activities, "Inspection," ocbcurs just before the product is f
On July 15, Mann Company sold $600,000 in accounts receivable for cash of $500,000. The factor withheld 10% of the cash proceeds to allow for possible customer returns or acco
Assume that there is general agreement that the annual soft benefits will yield at least $120,000 in additional net cash flows. In this case, should the investment be underta
Compute the amount of accumulated depreciation on each machine at December 31, 2015. If machine 2 was purchased on April 1 instead of July 1, what would be the depreciation e