Cost volume relationship

Assignment Help Managerial Accounting
Reference no: EM1347526

With possibility that the US Congress will relax restrictions on cutting old growth, a local lumber company is considering expanding its facilities. They can sell the lumber for .18 a board foot. The tax rate for company is 30%. The company has the following two opportunities:

1. Build factory A with annual fixed costs of $20 million and variable costs of $.10 /board-foot for factory A?

2. Build factory B with annual fixed costs of $10 million and variable costs of .12 /board foot. This factory has an annual capacity of 300 million board feet.

a. What is the break-even point in board-feet for factory A?
b. If the company wants to generate an after tax profit of $2 million with factory B, how many board feet would it have to process and sell?
c. If demand for lumber is uncertain which factory is riskier?
d. AT what level of board-feet would the after tax profit of the two factories be the same?

Reference no: EM1347526

Questions Cloud

Motivation and work learning : Show the purposes of conducting performance appraisals. What are the benefits of 360-degree feedback and have you participated in 360-degree feedback? Explain.
Eric kurtz worries about joyce performance : Evaluate whether the individuals will be motivated to behave as desired and then select the appropriate managerial action from those listed.
Explain how much do you believe will be the budget share : Assume after 10 years real consumer spending doubles to 100. Explain how much do you believe will be the budget share of leisure.
Button subprocedure to store user-s name in cell : If you wish to take in and store user's name in cell A1 by having them type their name following prompt declaring "Give me your name, Earthling!" that code excerpt must you use within button subprocedure?
Cost volume relationship : With possibility that the US Congress will relax restrictions on cutting old growth, a local lumber company is considering expanding its facilities. They can sell the lumber for .18 a board foot. The tax rate for company is 30%. The company has th..
Google business operation strategy : Synthesize the product, vertical and geographical scope of Google's endeavors and evaluate the effectiveness of their corporate strategy in creating value
Illustrate what would shoppers see when they shopped : Illustrate what would shoppers see when they shopped in Wal-Mart and the other "big box" stores that sell so many imported items
Find the energy of the electromagnetic radiation : A spring with spring constant 13 N/m hangs from the ceiling. A ball is attached to the spring and allowed to come to rest. It is then pulled down 8.5cm and free. The ball makes 26 oscillations in 18 s seconds.
Cvp analysis and income taxes : Diego Motors is a small car dealership. On average it sells the car for $25,000 which it buys from the manufacturer for $22,000. Each month, Diego Motors pays $50,000 in rent and utilities and $60,000 for salespeople's salaries.

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Develop a value chain for the airline industry

Develop a value chain for the airline industry

  Question regarding the cvp ananlysis

Suppose a fixed cost of $900, a variable cost of $4.50, and selling price of $5.50. Find out the break even point? How many units should be sold to make a profit of $500.? How many units should be sold to average $.0.25 profit per unit? .50 per un..

  Hr management- dealing with people

Dealing with people is probably the most difficult thing we will ever encounter in life.

  Information about equivalent units and costs

Determine the equivalent units of conversion. What is the conversion costs assigned to completed calendars? What amount of conversion is assigned to the ending work-in-process inventory?

  Types of products-job order costing system

Which of the following products would typically be accounted for using a job order costing system? Which would typically be accounted for using a process costing system?

  Planning strategies for the audit

Planning strategies for the audit

  Socially efficient level of public good

Explain verbally and graphically how the socially efficient amount of this good can be provided for them. Explain each term used in your answer.

  Which cost systems would companies use

Recognize which costing system - job order or process cost - the following companies would use:

  Direct and indirect costs of mad dogs

Mad Dog Enterprises manufactures computer game control devices like joysticks and steering wheels. Following is the list of the costs incurred by Mad Dog in 2009:

  Cash and investments of a bond sinking fund

Cash and investments of a bond sinking fund established to service general government long-term debt.

  Cost volume profit analyses

After reviewing its cost structure (variable costs of £7.50 per unit and monthly fixed costs of £60,000) and its potential market, the Forecast Company established what it considered to be a reasonable selling price.

  Knowledge-activity based costing

City of Joseph Commercial Bank hired consultants to compute the costs of three products: checking accounts, personal loans, and the Gold visa card. The consultant identified the following activities, costs and activity drivers (annual data):

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd