Master Business with Fun Quizzes & Brain Teasers!
The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer has 6 years of remaining life. If kept, the steamer will have depreciation expenses of $650 for 5 years and $325 for the sixth year. Its current book value is $3,575, and it can be sold on an Internet auction site for $4,145 at this time. If the old steamer is not replaced, it can be sold for $800 at the end of its useful life. Gilbert is considering purchasing the Side Steamer 3000, a higher-end steamer, which costs $12,900 and has an estimated useful life of 6 years with an estimated salvage value of $1,600. This steamer falls into the MACRS 5-years class, so the applicable depreciation rates are 20. 00%, 32. 00%, 19. 20%, 11. 52%, 11. 52%, and 5. 76%. The new steamer is faster and allows for an output expansion, so sales would rise by $2,000 per year; the new machine's much greater efficiency would reduce operating expenses by $1,700 per year. To support the greater sales, the new machine would require that inventories increase by $2,900, but accounts payable would simultaneously increase by $700. Gilbert's marginal federal-plus-state tax rate is 25%, and the project cost of capital is 14%. Required:a. Should it replace the old steamer?b. What is the NPV of the project?
Marie and ramesh form roundtree corporation with the transfer of the following. marie performs personal services for the corporation with a fair market value of $168,000 in exchange for 400 shares of stock. ramesh contributes an installment note receivable (basis $25,000; fair market value $30,000), land (basis $50,000; fair market value $170,000), and inventory (basis $377,600; fair market value $472,000) in exchange for 1,600 shares.required:determine marie and ramesh's current income, gain, or loss and calculate the basis that each takes in the roundtree stock.
Rundle Medical Equipment Company makes a blood pressure measuring kit. Jason McCoy is the production manager. The production departments static budget and actual results for 2019 follow: Static Budget Actual Results Production in units 28,000 kits 29,200 kits Direct materials ($6. 40 per unit) $ 179,200 $ 224,680 Direct labor ($5. 40 per unit) 151,200 150,480 Variable manufacturing overhead ($1. 50 per unit) 42,000 46,900 Total variable costs 372,400 422,060 Fixed manufacturing overhead 203,000 198,100 Total manufacturing cost $ 575,400 $ 620,160 Required a. Convert the static budget into a flexible budget. B. Calculate the volume variance for Direct materials, Direct labor and Fixed manufacturing overhead. C. Calculate the flexible budget variances for Direct materials, Direct labor and Fixed manufacturing overhead