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

How much will alan save or lose, Hale Company makes sets of wrenches. They ...

Hale Company makes sets of wrenches. They are trying to decide whether to continue to make the case the wrenches are sold in, or to outsource it to another company. The direct mate

Determine the customer inter-arrival time, During the dinner hour, the dist...

During the dinner hour, the distribution of the inter-arrival time of customers at Burger Barn is predictable to be as follows: Inter-arrival Time Probabi

Determine the variable cost element for selling expense, The following info...

The following information pertains to Tudor Logistics Company: 200X Information: Sales                                      $4,875,000 Selling expense

Determine the incremental cost, Determine the Incremental Cost A compa...

Determine the Incremental Cost A company currently makes a component that has the given unit cost structure Direct Material Shs. 100

West Industries, West Industries is a highly decentralized corporation with...

West Industries is a highly decentralized corporation with independent operating divisions. Each division is evaluated and rewarded based on its total net income. One of the divisi

Provisions or estimated liabilities, Where the liabilities are identified b...

Where the liabilities are identified but the amounts cannot be precisely found, we estimate the liability and give for it as a liability. A common illustration is income tax payabl

Assume a base cost for a conference room, A local hotel offers lodging serv...

A local hotel offers lodging services.  You can pick a name for the hotel(Home Sweet Home Hotel). Your team will develop a prototype reservation system to record client bookings fo

Generally accepted accounting principles, Generally Accepted Accounting Pri...

Generally Accepted Accounting Principles (GAAP) -Rules, conventions and procedures essential to define accepted accounting practice at a specific time. The highest level of such pr

Bad debts, These are losses on account of uncollectable debts. While the am...

These are losses on account of uncollectable debts. While the amount due from debtors is irrecoverable, it is termed as bad debts. Bad debts, being loss are closed through transfer

role in negotiated transfer prices, Price and Cost   information  play...

Price and Cost   information  play  no  role  in  negotiated  transfer  prices.  Do  you  agree? Describe.

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