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The Production Department has been investigating possible ways to trim total production costs. One possibility currently being examined is to make the paint cans instead of purchasing them. The equipment needed would cost $200,000, with a disposal value of $40,000, and it would be able to produce 5,500,000 cans over the life of the machinery. The Production Department estimates that approximately 1,100,000 cans would be needed for each of the next five years. The company would hire three new employees. These three individuals would be full-time employees, working 2,000 hours per year and earning $12.00 per hour. They would also receive the same benefits as other production employees, 18% of wages, in addition to $2,500 of health benefits. It is estimated that the raw materials will cost 25¢ per can and that other variable costs would be 5¢ per can. Since there is currently unused space in the factory, no additional fixed costs would be incurred if this proposal is accepted. It is expected that cans would cost 45¢ each if purchased from the current supplier. The company's minimum rate of return (hurdle rate) has been determined to be 12% for all new projects, and the current tax rate of 35% is anticipated to remain unchanged. The pricing for a gallon of paint, as well as the number of units sold, will not be affected by this decision. The unit-of-production depreciation method would be used if the new equipment is purchased. Required: 1. Based on the above information and using Excel, calculate the following items for this proposed equipment purchase:
2. Would you recommend the acceptance of this proposal? Why or why not? Prepare a short, double-spaced Word paper elaborating and supporting your answer.
Describe key issues of the case as they relate to Mr. Friehling's actions, or inactions, in relation to the AICPA's Code of Professional Conduct. Identify as well as describe the issues and provide examples to clarify and amplify your discussion. ..
Fundamentals of accounting assignment - Write up assets, capital and liability accounts in the books of D. Gough
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Assume Jason Woo Corp. restricted retained earnings in the amount of $280,000 on December 31, 2012. After this action, what would Woo report as total retained earnings in its December 31, 2012, balance sheet?
You are automating the weekly production reports so that you can easily compute total production for the entire company each week.
how much should it charge per month for a lobster-boat permit? (Hint: when the fee is F dollars per month, the marginal cost of operating a boat is (2000+F) dollars per month.
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Cost of goods sold for the year was $369,000. Northwest uses a perpetual inventory system. Illustrate what is ending inventory assuming Northwest uses the gross method to record purchases?
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Calculate the merchandise inventory values
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