User Account

All Pages

At what production level would x company be indifferent

Assignment Help Accounting Basics
Reference no: EM132742407

Question: X Company currently makes 2,500 units of a unique part for one of its finished products. Variable production costs for this part are $12.17 per unit; fixed costs associated with this part are $14,000 per year.

A company has offered to supply X Company with the part for a price of $15.70 per unit. For X Company, the bad news is that it will have to inspect the parts upon arrival, requiring rental of a special machine for $3,800 per year and per-unit inspection costs of $3.10. The good news is that if it buys the part, not only can it avoid all of the fixed costs associated with the production of the part, but it can use the released production facilities to generate $14,000 per year.

At what production level would X Company be indifferent between making the part and buying it?

Reference no: EM132742407

Questions Cloud

What should the owner of the company do : A company has always depreciated assets using the straight-line method. The tax accountant for the company has explained that a switch to the double-declining.
Explain what is capital allowance : Explain what is capital allowance, Classify capital allowances and applicable capital allowance accounts. The response must be typed.
What conditions must be met before allowance method used : The allowance method of recognizing bad debt expense (as opposed to the direct write-off method) can be applied in more than one way.
Estimate the current free cash flow to the firm : ABC Inc. reported EBIT of $2000 million. It also reported depreciation of $500 million and capital spending of $1.3 billion, working capital requirements
At what production level would x company be indifferent : X Company currently makes 2,500 units of a unique part for one of its finished products. Variable production costs for this part are $12.17 per unit.
Calculating costs of issuing stock : Suppose that a company's equity is currently selling for $25.75 per share and that there are 3.7 million shares outstanding and 17 thousand bonds outstanding
Estimate the current free cash flow to the firm : ABC Inc. reported EBIT of $2000 million. It also reported depreciation of $500 million and capital spending of $1.3 billion, working capital requirements are $1
What is the best retirement plan for a company : What is the best retirement plan for a company to offer its employees?
Financial management of healthcare facilities : What are the differences and similarities between a financial management of healthcare facilities and finical managers of other types of businesses?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd