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

Flexible Budget, Flexible budgeting is a reporting system wherin the

Flexible budgeting is a reporting system wherin the

Explain stock valuation, G. Mills was appointed a local agent for the High ...

G. Mills was appointed a local agent for the High Power Mobile Workshop Bolt (HPMW-B) on 1 April 2009. The HPMW-B is manufactured by Mobile Equipment Ltd (MEL). The company charges

Which of the following is a reason, . Which of the following is a reason wh...

. Which of the following is a reason why traditional product costing techniques have become obsolete in a lean operating environment? a. More complex accounting is required in a le

Identify the income statement and balance sheet, In January 2012, the manag...

In January 2012, the management of Stefan Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the fol

The overhead cost variances , The following facts have been extracted fr...

The following facts have been extracted from the standard cost card for product X:

Wacc under every of the capital structures, Imperial Sandwich Plc is to be ...

Imperial Sandwich Plc is to be established shortly. The founders are considering their options with regard to capital structure. A total of £5 m will be required to establish the b

Determine the expected rate of growth of dividends, General Motors has to r...

General Motors has to raise new capital in one of the following three ways. Using the income tax rate of 32%, find the after-tax cost of new capital in each case. (A) Sell commo

Prepare the consolidated balance sheet, H Bhd has a 75% holding in the ordi...

H Bhd has a 75% holding in the ordinary shares of S Sdn Bhd and 40% in A Sdn Bhd. Shares in S were acquired  in 2006 when its retained earnings were RM120 million.  The shares in A

Accrued income, Accrued income is an amount earned although not in reality ...

Accrued income is an amount earned although not in reality received during the accounting period or till the date of preparation of last accounts for the period concerned. The firs

Calculate the cost of capital and units of capital, The owner of the Hughes...

The owner of the Hughes Car Wash believes that the relationship between the number of cars washed and the amount of labor employed is Q = 0.8 + 4.5 L - 0.3 L2 where Q = the num

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