{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Mid term 2013 (Winter) - Commerce 354 Mid term...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Prepared’by’J.’Kroeker,’2013 ’ ©’ Sauder’School’of’Business,’UBC Page’ 1’ Commerce’354’ Mid-term’ Examination’(February’5,’2013) First Name: _______________________ Last Name:______________________________ Student #: _______________________ Please Circle Section M/W’ ’ 201’( 8:30am),’ 202’( 10’ am)’ ’ 203’(11:30’am) ’ ’ T/TH’204’(11:00’am) Question 1 (36 marks) Shenwin Ltd produces computer parts using leased machines that each have a capacity to make #25,000 per year. Shenwin can fit a total of 8 machines in its existing factory and can lease machines conveniently on a year -by-year basis. The cost of one machine lease in 2012 was $440,000 per machine. The factory is owned and is being depreciated at $218,000 per year for the next 10 years. The company always seeks to maximize profits and the CFO has indicated that inflation has been 10% but this has not impacted direct material costs since she signed a 4 year contract with the supplier in 2010. The labor costs were set for five years in a negotiated agreement in 2010 so there is no inflation in the labor figures. 2010 2012 Direct Materials 910,000 1,240,000 Direct Labor 1,365,000 1,860,000 Overhead 8,458,000 11,174,000 Total Costs $ 10,733,000 14,274,000 Units Produced & Sold # 91,000 # 124,000 "Average cost" 117.95 115.11 Industry experts expect inflation to be 3% in 2013. The selling price per unit was $119 in 2012. Shenwin feels it can increase its selling price at the rate of inflation. Demand for 2013 is expected to be #124,000. a) Calculate the expected contribution margin for 2013? (6 marks)
Background image of page 1

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

View Full Document Right Arrow Icon
Prepared’by’J.’Kroeker,’2013 ’ ©’ Sauder’School’of’Business,’UBC Page’ 2’ b) Calculate the expected cost to lease one machine in 2013? (2 marks) c) Calculate the number of units required to justify the leasing of an additional machine. (4 marks) d) The CFO would like to know the cash flow that could be expected from 2013 if sales volume remains the same as in 2012? (4 marks)
Background image of page 2
Prepared’by’J.’Kroeker,’2013
Background image of page 3

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

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 10

Mid term 2013 (Winter) - Commerce 354 Mid term...

This preview shows document pages 1 - 4. Sign up to view the full document.

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