Purchase situation for component used in low-priced products

Assignment Help Financial Management
Reference no: EM131561457

Answer the question. A night vision goggle manufacturer is evaluating a make-versus-purchase situation for a component used in its low-priced products. The component can be purchased at a variable wholesale price of P=1200+50X, where X is the number of items. Alternatively, the component can be produced with a direct material cost of $17 per item and direct labor cost of $38 per item. The manufacturing overhead is allocated at 150% of direct labor cost per item. If the company requires, on average, 575 items each year, should the item be purchased or manufactured?

Reference no: EM131561457

Questions Cloud

Has dollar bill financing cycle improved : DOLLAR BILL'S, a retail store in New York City, buys its inventory on credit. All other factors remain the same. Has DOLLAR BILL’S financing cycle improved.
Estimate for the project before its npv becomes negative : What is the net present value of the project? What is the highest possible beta estimate for the project before its NPV becomes negative?
Considering replacing your old nissan with new hyundai : Assume that you are considering replacing your old Nissan with a new Hyundai. When should you replace it with the new Hyundai in this case?
What is the effect on the project npv : After estimating a project’s NPV, the analyst is advised that the fixed capital outlay will be revised upward by $100,000. What is effect on the project NPV?
Purchase situation for component used in low-priced products : A night vision goggle manufacturer is evaluating a make-versus-purchase situation for a component used in its low-priced products.
Purchase situation for component used in low-priced products : A night vision goggle manufacturer is evaluating a make-versus-purchase situation for a component used in its low-priced products.
What is the ear and apr on this loan : You have just purchased a new warehouse. What is the APR on this loan? What is the EAR on this loan?
What royalty per pack would permit the store to earn : What royalty per pack would permit the store to earn a 10% profit margin on course packs, other things held constant?
Average balance of transactions account : A bank has an average balance of transactions account, August 10 to 23, of $933.34 million.

Reviews

Write a Review

Financial Management Questions & Answers

  Company is expected to have free cash flow

A company is expected to have free cash flow of $20 million next year the average cost of capital is WACC = 10% and the expected constant growth rate is g= 6%. The company has $9 million in maketable securities, $7 million in debt, and $6 million in ..

  What is the uniform series equivalent of the fund

Jimmy deposits $3,000 now, $2,900 3 years from now, and $4,200 6 years from now. Interest is 3% for the first 3 years and 8% for the last 3 years. What is the present worth of the fund?  What is the uniform series equivalent of the fund (uniform cash..

  Calculate the cost of the preferred stock

Mavis Taylor Corporation has just issued preferred stock. The stock has a 6% annual dividend and a $100 par values, and was sold at $98.5 per share. Flotations costs were an additional $3 per share. Calculate the cost of the preferred stock

  Determine the annual after-tax net cash flow

A highway contractor is considering buying a new trench excavator that costs $300,000 and can dig a 3-foot-wide trench at the rate of 16 feet per hour. The annual number of feet to dig each year is 6,400. determine the annual after-tax net cash flow...

  What is the expected annual cash flow

Cooper Commons is considering purchasing new, technologically advanced solar panels. The equipment will cost $625,000 with a salvage value of $50,000 at the end of its useful life of 10 years. The excess electricity from the panels will be sold back ..

  Hosting their annual convention

Procrastinators Anonymous (PA) is hosting their annual convention this coming year in Dallas, TX. Although this is not typical of this organization, they wish to plan ahead to determine what the cost of the keynote banquet ticket should be. If a tick..

  Evaluate the market value of the building

You have been hired by an investor to evaluate for investment purposes a mixed-use building. The investor is looking for a market value estimate of the building. There are 20 apartment units all with 2 bedrooms and 1 bathroom and have 1000 sq ft. Eva..

  Fixed assets is required to support this growth in sales

Thorpe Mfg., Inc., is currently operating at only 86 percent of fixed asset capacity. Current sales are $710,000. Suppose fixed assets are $600,000 and sales are projected to grow to $834,000. How much in new fixed assets is required to support this ..

  Determine the approximate net present value of acquisition

Determine the approximate net present value of this acquisition.

  Market is in equilibrium with the required return

Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.75 coming 3 years from today. If the ..

  Why they were important during the housing and credit crisis

Explain the following terms and explain why they were important during the housing and credit crisis of 2007-2009. Securitization Subprime loan Asset write down 3.

  What would be appropriate estimate of the stock price today

A company is expected to pay a dividend of $1.24 per share one year from now and $1.75 in two years. You estimate the risk-free rate to be 4.1% per year and the expected market risk premium to be 5.3% per year. In two years, you expect the leading PE..

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