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

What are fixed costs, The costs that are fixed irrespective of manufacture ...

The costs that are fixed irrespective of manufacture are fixed costs. EX: Rent, Depreciation. Fix cost is those cost who not alter in any time whether the production done or not

Calculate the moderate earnings per share, A listed entity, had 3,000,000 $...

A listed entity, had 3,000,000 $1 ordinary shares in issue, On 1 January 2009 CSA.CSA made a bonus issue of 1 for 3, On 1 May 2009. CSA issued 2,000,000 $1 ordinary shares for $3.2

Prepare cost sheet, A job order cost sheet for Lowery Company is shown belo...

A job order cost sheet for Lowery Company is shown below Date Direct Materials Direct Labor Manufacturing overhead Beg Bal Jan 1 5,000 6,000 5,100 8 6,000 12 8,000 6,400 25 2,000 2

Idle capacity, How does idel capacity effect cost behavior patterns and fac...

How does idel capacity effect cost behavior patterns and factory overhead application methods

Example of job order costing, Example of Job Order Costing The giv...

Example of Job Order Costing The given transactions were made by a company in the month of December. Direct Materials a) 8,000/- was bought on credit, out of these

Determine a cost system that uses estimated overhead costs, 1) Presented be...

1) Presented below is a list of terms, followed by definitions or descriptions of those terms. a. Cost pool b. Actual cost system c. Cost driver d. Manufacturing diver

What is the steady-state value of capital labor ratio, 1. A country has the...

1. A country has the per-worker production function  y t = 6 k t 0.5   where y t is output per worker and k t is the capital-labor ratio. The depreciation rate is 0.1 and t

Differential costing, What do you mean by differential costing ? How it dif...

What do you mean by differential costing ? How it differ from marginal costing ? explain its practical application with examples?

Costing term, Match each of the six following terms with the phrase that mo...

Match each of the six following terms with the phrase that most closely describes it. Each answer may be used only once. _____ 1. Direct costs _____ 2. Fixed costs _____ 3

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