Calculate the minimum annual sales, Cost Accounting

Assignment Help:

a factory operates a small canteen but its annual operation has consistently shown a loss:

                                                                                      $                       $
sales                                                                                                   100,000
cost of food & beverage                                                  50,000
salaries                                                                          60,000
                                                                                   ------------
                                                                                   110,000
                                                                                                          -------------- 
                                                                                                           (10,000)
the company is considering buying automatic food & drink Vending Machines at a cost $24,000 less $5,000 trade-in on the existing dining room equipment. The estimated useful life of the vending machines is ten years with no scrap value.

the vending machine company would supply the food, drink and services engineers at its own expense. However it would take all sales receipts except 10% of gross receipts to the factory. It is estimated that sales with vending machines will increase by 50% but price has to be 50% less.

the factory has to employ one attendant in the dining area at an annual cost of $6,300. Termination payments for all other canteen staff are $8,000. Determine the answer to the following quest:

1) how long is the payback period?

2) what is the NPV of the project asssuming cost of capital to be 20%

3)what is the IRR?

4) forecast sales from the vending machine is uncertain. if the factory receives only $2,500 a year for its share of gross receipts, will the project be feasible?

5) what is the minimum annual sales required to justify investment in the vending machine?


Related Discussions:- Calculate the minimum annual sales

Calculate the weighted average cost of capital, A company is investigating ...

A company is investigating the effect on its cost of capital with respect to the tax rate. Suppose there is a capital structure of 20% debt, 10% preferred stock, and 70% common sto

Determine profit by using absorption costing, Determine Profit by Using Abs...

Determine Profit by Using Absorption Costing Assuming the fixed overhead absorption rate was Ksh.3 per litre, then what would be the profit utilizing absorption costing? a)

Prepare the journal entries to record non-monetary exchange, Moore Corporat...

Moore Corporation follows a policy of a 10% depreciation charge per year on all machinery and a 5% depreciation charge per year on buildings (the corporation uses the nearest full

Prepaid expenses, Expenses paid in previous of their use or consumption is ...

Expenses paid in previous of their use or consumption is termed as prepaid expenses. At the ending of the year, a portion of the payment keeps unconsumed and is treated like an ass

Prepare the entry to assign factory labor to production, The gross earnings...

The gross earnings of the factory workers for Vargas Company during the month of January are $66,000. The employer's payroll taxes for the factory payroll are 8,000. The fringe ben

Elements of cost, Elements of Cost Nearly there are three elements of c...

Elements of Cost Nearly there are three elements of cost - labor, material, and expenses. These are additional divided into indirect and direct material, indirect and direct la

the refuse department , The CFO of ABC Municipality has heard of activity ...

The CFO of ABC Municipality has heard of activity based costing and wants to execute it in the municipality. Because ABC involves a number of changes to how service costs are deter

Find the statement of cash flows, 1. A fellow student says to you: "The sta...

1. A fellow student says to you: "The statement of cash flows is the easiest of the basic financial statements to prepare because you know the answer before you start. You compa

What was the cost of goods manufactured for the period, A company started w...

A company started with $0 in direct materials, purchased $5,000 of materials, and ended with $300 in materials. Direct labor equaled $4,000. The applied overhead for the period was

Exploration costs, are exploration cost treated as an asset or expense or b...

are exploration cost treated as an asset or expense or both?

Write Your Message!

Captcha
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