Concord Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $95,000 for themachine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a$12,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The companycurrently produces and sells 9,000 frames per year, generating a total contribution margin of $92,500.Martson Molders currently sells a molding machine that will allow Concord Pix to increase production and sales to 12,000 frames peryear. The machine, which has a ten-year life, sells for $135,000 and would cost $10,000 per year to operate. Concord Pix's currentmachine costs only $8,000 per year to operate. If Concord Pix purchases the new machine, the old machine could be sold at its bookvalue of $5,000. The new machine is expected to have a salvage value of $19,900 at the end of its ten-year life. Concord Pix usesstraight-line depreciation.Click here to view the factor table. (c).Calculate the new machine's payback period. (Round answer to 2 decimal places, e.g. 1.25.)Payback periodyears

Payback period is the period required to recover the initial amount of investment in the project…

Answered: oncord Pix currently uses a…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 16PB: At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The...

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Similar questions

At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $67,000 per year, to ease the problem. Using the extra worker, the company will be able to produce and sell 9,000 more units per year. The selling price per unit is $20. The cost per unit currently is $15.85 as shown: What is the annual financial impact of hiring the extra worker for the bottleneck process?
Bramble Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $88,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $12,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 11,000 frames per year, generating a total contribution margin of $85,500. Martson Molders currently sells a molding machine that will allow Bramble Pix to increase production and sales to 15,000 frames per year. The machine, which has a ten-year life, sells for $131,000 and would cost $12,000 per year to operate. Bramble Pix's current machine costs only $8,000 per year to operate. If Bramble Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $19,500 at the end of its ten-year life.…
Whispering Winds Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $108,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $8,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $102,000.Martson Molders currently sells a molding machine that will allow Whispering Winds Pix to increase production and sales to 20,000frames per year. The machine, which has a ten-year life, sells for $143,000 and would cost $15,000 per year to operate. Whispering Winds Pix’s current machine costs only $8,000 per year to operate. If Whispering Winds Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $20,000 at…
Whispering Winds Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $ 108,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $ 8,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $ 102,000. Martson Molders currently sells a molding machine that will allow Whispering Winds Pix to increase production and sales to 20,000 frames per year. The machine, which has a ten-year life, sells for $ 143,000 and would cost $ 15,000 per year to operate. Whispering Winds Pix's current machine costs only $ 8,000 per year to operate. If Whispering Winds Pix purchases the new machine, the old machine could be sold at its book value of $ 5,000. The new machine is expected to have a salvage value of $…
Concord Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $95,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $12,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 9.000 frames per year, generating a total contribution margin of $92,500. Martson Molders currently sells a molding machine that will allow Concord Pix to increase production and sales to 12,000 frames per year. The machine, which has a ten-year life, sells for $135,000 and would cost $10,000 per year to operate. Concord Pix's current machine costs only $8,000 per year to operate. If Concord Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $19,900 at the end of its ten-year life. Concord…
Waterways is considering the replacement of an antiquated machine that has been slowing down production because of breakdowns and added maintenance. The operations manager estimates that this machine still has 2 more years of possible use. The machine produces an average of 50 units per day at a cost of $6.50 per unit, whereas other similar machines are producing twice that much. The units sell for $8.30. Sales are equal to production on these units, and production runs for 260 days each year. The replacement machine would cost $49,800 and have a 2-year life. Given the information above, what are the consequences of Waterways replacing the machine that is slowing down production because of breakdowns? Replacing the machine will result in a net loss of $ . Waterways should keep the old machin
Waterways is considering the replacement of an antiquated machine that has been slowing down production because of breakdowns and added maintenance. The operations manager estimates that this machine still has 2 more years of possible use. The machine produces an average of 60.00 units per day at a unit cost of $6.80, whereas other similar machines are producing twice that much. The units sell for $9.00. Sales are equal to production on these units, and production runs for 260 days each year. The replacement machine would cost $71,940 and have a 2-year life. Given the information above, what are the consequences of Waterways replacing the machine that is slowing down production because of breakdowns? Replacing the machine will result in a net loss of $ . Waterways should keep the old i
The TechHelp Company produces and sells 7,500 modular computer desks per year at a selling price of $ 600 each. Its current production equipment, purchased for$ 1, 500 ,000 and with a 5-year useful life, is only 2 years old. It has a terminal disposal value of $0 and is depreciated on a straight-line basis. The equipment has a current disposal price of$ 550, 000. However, the emergence of a new molding technology has led TechHelp to consider either upgrading or replacing the production equipment. The following table presents data for the two alternatives:
Waterways is considering the replacement of an antiquated machine that has been slowing down production because of breakdowns and added maintenance. The operations manager estimates that this machine still has 2 more years of possible use. The machine produces an average of 50.00 units per day at a unit cost of $6.80, whereas other similar machines are producing twice that much. The units sell for $9.30. Sales are equal to production on these units, and production runs for 260 days each year. The replacement machine would cost $68,000 and have a 2-year life. Given the information above, what are the consequences of Waterways replacing the machine that is slowing down production because of breakdowns? Replacing the machine will result in a of $ Waterways keep the old
InteliSystems manufactures an optical switch that it uses in its final product. InteliSystems incurred the following manufacturing costs when it produced 70,000 units last year as shown in the chart below: InteliSystems does not yet know how many switches it will need this year; however, another company has offered to sell InteliSystems the switch for $8.50 per unit. If InteliSystems buys the switch from the outside supplier, the manufacturing facilities that will be idle cannot be used for any other purpose; yet none of the fixed costs are avoidable. Requirements 1. Given the same cost structure, should InteliSystems make or buy the switch? Show your analysis. 2. Now, assume that InteliSystems can avoid $105,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, InteliSystems needs 75,000 switches a year rather than 70,000 switches. What should the company do now? 3. Given the last scenario, what is the most InteliSystems would be willing to…
As a result of improvements in product engineering, United Automation is able to sell one of its two milling machines. Both machines perform the same function but differ in age. The newer machine could be sold today for $63,500. Its operating costs are $21,800 a year, but in five years the machine will require a $19,100 overhaul. Thereafter operating costs will be $30,900 until the machine is finally sold in year 10 for $6,350. The older machine could be sold today for $25,900. If it is kept, it will need an immediate $24,500 overhaul. Thereafter operating costs will be $34,000 a year until the machine is finally sold in year 5 for $6,350. Both machines are fully depreciated for tax purposes. The company pays tax at 35%. Cash flows have been forecasted in real terms. The real cost of capital is 13%. a. Calculate the equivalent annual costs for selling the new machine and for selling the old machine. (Do not round intermediate calculations. Enter your answers as a positive value rounded…
WorldSystems manufactures an optical switch that it uses in its final product. WorldSystems incurred the following manufacturing costs when it produced 72,000 units last year: WorldSystems does not yet know how many switches it will need this year; however, another company has offered to sell WorldSystems $11.50 per unit. If WorldSystems buys the switch from the outside supplier, the manufacturing facilities that will be idle cannot be used fe purpose, yet none of the fixed costs are avoidable. E (Click the icon to view the manufacturing costs.) Read the reguirements. Requirement 1. Given the same cost structure, should WorldSystems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether WorldSystems should make or buy the switch. (Enter a "0" for any zero amounts. Round amounts to the nearest cent. Use a minus sign or parentheses when the cost to buy exceeds the cost to make.) World Systems Incremental Analysis for Outsourcing Decision - X Make Buy…

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