60,000 $ 122,000
What is the a) estimated variable cost per machine hour and what is the b) estimated TOTAL fixed cost?
Question 5. Question:( TCO 7) North Company produces a small part that it uses in the production of its Product " H ". The company ' s unit product cost for the part, based on a production of 100,000 parts per year, is as follows:................................................. Per part.................... Total
parts to the North Company for only $ 21.25 per part.( it appears to the President of the company that he could save $ 2.75 per unit. 100 percent of the traceable or avoidable fixed manufacturing cost is supervisor salaries and other costs that can be ELIMINATED if the parts are purchased. The decision to buy the parts from the outside supplier would have no effect on the common fixed costs of the company, and the space being used to produce the parts would otherwise be idle. Ignore the impact of income taxes in your calculation. How much would profits increase or decrease as a result of purchasing the parts from the outside supplier rather than making them inside the company?
Question 6. Question:( TCO 9) Harry Corp buys equipment for $ 194,000 that will last for 9 years. The equipment will generate cash flows of $ 36,000 per year and will have no salvage value at the end of its life. Ignore taxes. Use 10 % required rate of return.
( a) What is the Present Value( PV) of this investment( at 10 %)?
( b) What is the NET Present Value( NPV) of this investment Should you buy the equipment if you need 10 %?