Tamika Jackson-AC505 Project B (Clark Paint)

Tamika Jackson-AC505 Project B (Clark Paint) -...

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AC505-Managerial Accounting Project B Clark Paint Capital Budgeting Problem Data: Cost of new equipment $200,000 Expected life of equipment in years 5 Disposal value in 5 years $40,000 Life production - number of cans 5,500,000 Annual production or purchase needs 1,100,000 Initial training costs Number of workers needed 3 Annual hours to be worked per employee 2000 Earnings per hour for employees $12.00 Annual health benefits per employee $2,500 Other annual benefits per employee-% of wages 18% Cost of raw materials per can $0.25 Other variable production costs per can $0.05 Costs to purchase cans - per can $0.45 Required rate of return Tax rate 35% 12% Make Purchase Cost to Produce Annual cost of direct material: Need of 1,1,000,000 cans per year $275,000 Annual cost of direct labor for new employees: Wages $72,000 Health benefits $7,500 Other benefits $12,960 Total wages and benefits $92,460 Other variable cost: $55,000 Total annual production costs $422,460 Annual cost to purchase cans
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This note was uploaded on 09/12/2010 for the course ACCT AC505 taught by Professor Roberts during the Winter '10 term at Keller Graduate School of Management.

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Tamika Jackson-AC505 Project B (Clark Paint) -...

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