MAQuiz5 - ACG 2071 Quiz October 2, 2007 Name_ UFID#_ UF...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Name____________________________________ October 2, 2007 UFID#___________________________ UF Inc. is considering replacing (or keeping) some old equipment. Equipment information is as follows: Old Replacement Original cost $96,000 $50,000 Useful life in years 12 5 Current age in years 7 0 Net book value $40,000 - Disposal value now $35,000 - Disposal value in 5 years 0 0 Annual cash operating costs $15,000 $11,000 1. Calculate the relevant (financial) advantage for the five year period of “Replacing” over “Keeping” the equipment. 2. Calculate the accounting cost difference in the first year between “Replacing” and “Keeping”. Use accrual-based accounting costs (performance model) and straight-line depreciation. Alligator, Inc. uses a joint process to produce products A, B, and C. Each product may be sold at the split-off point or processed further and then sold. Joint processing costs were $200,000. Other data were: Sales Value Separable Processing Sales Value Product at Split - off Costs after Split - off at Completion A $94,000 $28,000 $125,000 B 60,000 8,000 65,000 C 66,000 12,000 80,000 3. Calculate the maximum operating income . Florida, Inc. manufactures a part used in a final product. The costs for 1,000 units of the part are: Direct materials $10,000 Direct labor 14,000 Variable factory overhead 16,000 Fixed factory overhead (unavoidable) 20,000 Total costs $60,000 Florida, Inc. can buy 1,000 units of the part from Seminole for $55 each. The facilities currently used to make the part could also be used to make 1,000 units of a product that has a contribution margin of $20 per unit. No additional fixed costs would be incurred. 4. Calculate the relevant (financial) advantage of “Buying” over “Making” the part . Gator Industries produces and sells products A, B and C. Production is limited by the availability of 25,000 machine hours and sales by product demand. Other pertinent data are: Products A B C Contribution margin per unit $10 $8 $12 Machine hours per unit 2 1 1 Demand (units) 10,000 10,000 5,000 5. Calculate the total contribution margin for the optimal production and sales plan. Answers
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

MAQuiz5 - ACG 2071 Quiz October 2, 2007 Name_ UFID#_ UF...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online