+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
Prepare Photo Artistry Company's master budget for 2014 by completing the schedules Prepare a memo for Photo Artistry Company identifying issues that management should con
Calculate the expected gross margin next month.  Calculate the expected contribution margin next month.  Calculate the expected total administrative expense next month.
Calculate the firm's cash conversion cycle. Calculate the firm's operating cycle Calculate the daily expenditure and the firm's annual savings if the operating cycle is reduce
Evaluate Charlotte's proposal. Do you support use of a transfer price for maintenance services? If so, should the price approximate the market price of service or should it be
Slatter Corp operates primarily in the United States. However, few years ago, it opened plan in Spain to produce merchandise to sell there. This foreign operation has been s
How much higher or lower would Penske's earnings before taxes have been in 2010 if its gross margin percentage had been the same as it was in 2009? Show all supporting computa
When bonds are issued at other than par value, a discount or premium is recorded. This discount or premium is amortized over the life of the bond. However, a callable bond may
Find out the current operatng profit for the company as whole? Supposing that all fixed cost are unavoidable, if company eliminated the unprofitable segments, what would be t