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Appendix A
Future value interest factor of $1 per period at i% for n periods,
FVIF(i,n).
P
eriods
RATE PER PERIOD
1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
1 1.010 1.020 1.030 1.040 1.050 1.060 1.070 1.080 1.090
1.100
2 1.020 1.040 1.061 1.082 1.103 1.124 1.145 1.166 1.188
1.210
3 1.030 1.061 1.093 1.125 1.158 1.191 1.225 1.260 1.295
1.331
4 1.041 1.082 1.126 1.170 1.216 1.262 1.311 1.360 1.412
1.464
5 1.051 1.104 1.159 1.217 1.276 1.338 1.403 1.469 1.539
1.611
6 1.062 1.126 1.194 1.265 1.340 1.419 1.501 1.587 1.677
1.772
7 1.072 1.149 1.230 1.316 1.407 1.504 1.606 1.714 1.828
1.949
8 1.083 1.172 1.267 1.369 1.477 1.594 1.718 1.851 1.993
2.144
9 1.094 1.195 1.305 1.423 1.551 1.689 1.838 1.999 2.172
2.358
10 1.105 1.219 1.344 1.480 1.629 1.791 1.967 2.159 2.367
2.594
11 1.116 1.243 1.384 1.539 1.710 1.898 2.105 2.332 2.580
2.853
12 1.127 1.268 1.426 1.601 1.796 2.012 2.252 2.518 2.813
3.138
13 1.138 1.294 1.469 1.665 1.886 2.133 2.410 2.720 3.066
3.452
14 1.149 1.319 1.513 1.732 1.980 2.261 2.579 2.937 3.342
3.797
15 1.161 1.346 1.558 1.801 2.079 2.397 2.759 3.172 3.642
4.177
16 1.173 1.373 1.605 1.873 2.183 2.540 2.952 3.426 3.970
4.595
17 1.184 1.400 1.653 1.948 2.292 2.693 3.159 3.700 4.328
5.054
18 1.196 1.428 1.702 2.026 2.407 2.854 3.380 3.996 4.717
5.560
19 1.208 1.457 1.754 2.107 2.527 3.026 3.617 4.316 5.142
6.116
20 1.220 1.486 1.806 2.191 2.653 3.207 3.870 4.661 5.604
6.727
25 1.282 1.641 2.094 2.666 3.386 4.292 5.427 6.848 8.623
10.835
30 1.348 1.811 2.427 3.243 4.322 5.743 7.612 10.063
13.268 17.449
35 1.417 2.000 2.814 3.946 5.516 7.686 10.677 14.785
20.414 28.102
40 1.489 2.208 3.262 4.801 7.040 10.286 14.974 21.725
31.409 45.259
50 1.645 2.692 4.384 7.107 11.467 18.420 29.457 46.902
74.358 117.391
Future value interest factor of $1 per period at i% for n periods,
FVIF(i,n).
P
eriods
RATE PER PERIOD
11% 12% 13% 14% 15% 16% 17% 18% 19% 20%
1 1.110 1.120 1.130 1.140 1.150 1.160 1.170 1.180 1.190
1.200
2 1.232 1.254 1.277 1.300 1.323 1.346 1.369 1.392 1.416
1.440
3 1.368 1.405 1.443 1.482 1.521 1.561 1.602 1.643 1.685
1.728
4 1.518 1.574 1.630 1.689 1.749 1.811 1.874 1.939 2.005
2.074
5 1.685 1.762 1.842 1.925 2.011 2.100 2.192 2.288 2.386
2.488
6 1.870 1.974 2.082 2.195 2.313 2.436 2.565 2.700 2.840
2.986
7 2.076 2.211 2.353 2.502 2.660 2.826 3.001 3.185 3.379
3.583
8 2.305 2.476 2.658 2.853 3.059 3.278 3.511 3.759 4.021
4.300
9 2.558 2.773 3.004 3.252 3.518 3.803 4.108 4.435 4.785
5.160
10 2.839 3.106 3.395 3.707 4.046 4.411 4.807 5.234 5.695
6.192
11 3.152 3.479 3.836 4.226 4.652 5.117 5.624 6.176 6.777
7.430
12 3.498 3.896 4.335 4.818 5.350 5.936 6.580 7.288 8.064
8.916
13 3.883 4.363 4.898 5.492 6.153 6.886 7.699 8.599 9.596
10.699
14 4.310 4.887 5.535 6.261 7.076 7.988 9.007 10.147
11.420 12.839
15 4.785 5.474 6.254 7.138 8.137 9.266 10.539 11.974
13.590 15.407
16 5.311 6.130 7.067 8.137 9.358 10.748 12.330 14.129
16.172 18.488
17 5.895 6.866 7.986 9.276 10.761 12.468 14.426 16.672
19.244 22.186
18 6.544 7.690 9.024 10.575 12.375 14.463 16.879 19.673
22.901 26.623
19 7.263 8.613 10.197 12.056 14.232 16.777 19.748 23.214
27.252 31.948
20 8.062 9.646 11.523 13.743 16.367 19.461 23.106 27.393
32.429 38.338
25 13.585 17.000 21.231 26.462 32.919 40.874 50.658
62.669 77.388 95.396
30 22.892 29.960 39.116 50.950 66.212 85.850 111.065
143.371 184.675 237.376
35 38.575 52.800 72.069 98.100 133.176 180.314 243.503
327.997 440.701 590.668
40 65.001 93.051 132.782 188.884 267.864 378.721
533.869 750.378 1,051.668 1,469.772
50 184.565 289.002 450.736 700.233 1,083.657 1,670.704
2,566.215 3,927.357 5,988.914 9,100.438
Your answer is CORRECT.
Differentiate the function
a)
b)
c)
d)
e)
Question 2
Your answer is CORRECT.
Calculate the derivative of the given function:
a)
b)
c)
d)
e)
Question 3
Your answer is CORRECT.
Determine the values of x for which f '(x) = 0, given that
a)
b)
c)
d)
e)
Question 4
Your answer is INCORRECT.
Determine the values of x for which f '(x) < 0, given that
a) (-∞, -
2
⁄3) ∪ (0,
2
⁄3)
b) (-
2
⁄3, 0) ∪ (
2
⁄3, ∞)
c) (-
3
⁄2, 0) ∪ (
3
⁄2, ∞)
d) (-
3
⁄2,
3
⁄2)
e) (-∞, -
3
⁄2) ∪ (0,
3
⁄2)
Question 5
Your answer is CORRECT.
Calculate the derivative of the given function:
a)
b)
c)
d)
e)
Question 6
Your answer is CORRECT.
Calculate the derivative of the given function:
a)
b)
c)
d)
e)
Question 7
Your answer is CORRECT.
Calculate the derivative of the given function:
a)
b)
c)
d)
e)
Question 8
Your answer is CORRECT.
Find the indicated derivative.
a)
b)
c)
d)
e)
Question 9
Your answer is CORRECT.
Find
dy
⁄dx .
a)
b)
c)
d)
e)
Question 10
Your answer is CORRECT.
Find the second derivative.
a)
b)
c)
d)
e)
Question 11
Your answer is INCORRECT.
Use differentials to estimate the value indicated.
a)
273
⁄50
b)
223
⁄50
c) 2
d)
124
⁄25
e)
126
⁄25
Question 12
Your answer is INCORRECT.
Use differentials to estimate the value indicated.
a)
323
⁄160
b)
243
⁄160
c)
403
⁄160
d)
317
⁄160
e)
13
⁄5
Question 13
Your answer is CORRECT.
Use differentials to estimate the value indicated.
a)
b)
c)
d)
e)
Question 14
Your answer is CORRECT.
Use one iteration of the Newton-Raphson method to estimate a
root of the equation f(x) = 0 starting at the
indicated value of x.
a) -7
b)
97
⁄14
c)
47
⁄7
d)
99
⁄14
e)
51
⁄7
Question 15
Your answer is CORRECT.
Use one iteration of the Newton-Raphson method to estimate a
root of the equation f(x) = 0 starting at the
indicated value of x.
a) 7
b) -8
c)
81
⁄40
d)
79
⁄40
e) -3
Question 16
Your answer is CORRECT.
The function f is graphed below on the interval [0,10].Give the
number of valuesc between 0 and 10
which satisfy the conclusion of the mean value theorem for f.
a) 1
b) 5
c) 2
d) 3
e) 4
Question 17
Your answer is CORRECT.
Determine if Rolles Theorem applies to the given function on
[0,1]. If so, find all numbers c on the interval
that satisfy the theorem.
a)
b)
c)
d)
e)
Question 18
Your answer is INCORRECT.
Determine if Rolles Theorem applies to the given function on
[0,π]. If so, find all numbers c on the interval
that satisfy the theorem.
a)
b)
c)
d)
e)
Question 19
Your answer is CORRECT.
Determine if the given function satisfies the Mean Value
Theorem on [4,49]. If so, find all numbers c on
the intervals that satisfy the theorem.
a)
b)
c)
d)
e)
Question 20
Your answer is CORRECT.
Determine if the given function satisfies the Mean Value
Theorem on [0,2]. If so, find all numbers c on the
interval that satisfy the theorem.
a)
b)
c)
d)
e)
ABC Co Consolida Financial InfoABC Company's current
financial information (before/without expansion)Dec. 31,20X2
Dec. 31,20X1 Cash $ 50,000$ 70,000Accounts receivable
(net) $ 120,000$ 180,000Merchandise inventory $ 350,000$
280,000Property plant, & equipment $ 400,000$
300,000Less: Accumulated depreciation $ (170,000)$
(100,000)Total assets $ 750,000$ 730,000Accounts payable $
250,000$ 210,000Income taxes payable $ 40,000$
10,000Common stock $ 240,000$ 240,000Retained earnings $
220,000$ 270,000Total liabilities & stock, equity $ 750,000$
730,000The firm's accrual-basis income statement revealed the
following data:Sales$ 1,200,000Cost of goods sold$
800,000selling and administrative expenses$
250,000Depreciation expense$ 70,000Income taxes$
30,000Dividends declared and paid during 19X2 $
100,000ABC purchased $100,000 of equipment for cash on
August 14.(There was no interest expense.)
ABC Co Product informationBased on Chapter 5's exercise
5ABC's Product informationCurrent ProductExpansion Product
(estimate)Selling Price$14.50?Units produced and expected to
be sold80,0005,000Machine Hours40,0005,000Direct
Materials$1.30 per unit$5.60 per unitDirect labor dollars needed
per product$2.80 per unit$4.00 per unitVariable Factory
Overhead$1.00 per Machine Hour$1.00 per Machine
HourVariable Selling Expense$0.20 per unit$0.20 per unitTotal
Fixed Costs:Fixed Factory Overhead$ 198,000Fixed Selling
expenses$ 191,250
Focus of the Final Paper
You’ve just been hired onto ABC Company as the corporate
controller. ABC Company is a manufacturing firm that
specializes in making cedar roofing and siding shingles. The
company currently has annual sales of around $1.2 million, a
25% increase from the previous year. The company has an
aggressive growth target of reaching $3 million annual sales
within the next 3 years. The CEO has been trying to find
additional products that can leverage the current ABC employee
skillset as well as the manufacturing facilities.
As the controller of ABC Company, the CEO has come to you
with a new opportunity that he’s been working on. The CEO
would like to use the some of the shingle scrap materials to
build cedar dollhouses. While this new product line would add
additional raw materials and be more time-intensive to
manufacture than the cedar shingles, this new product line will
be able to leverage ABC’s existing manufacturing facilities as
well as the current staff. Although this product line will require
added expenses, it will provide additional revenue and gross
profit to help reach the growth targets. The CEO is relying on
you to help decide how this project can be afforded Provide
details about the estimated product costs, what is needed to
break even on the project, and what level of return this product
is expected to provide.
In order to help out the CEO, you need to prepare a six- to
eight-page report that will contain the following information
(including exhibits, but excluding your references and title
page). Refer to the accompanying Excel spreadsheet (available
through your online course) for some specific cost and profit
information to complete the calculations.
Final Paper Spreadsheet
I. An overall risk profile of the company based on current
economic and industry issues that it may be facing.
II. Current company cash flow
a. You need to complete a cash flow statement for the company
using the direct method.
b. Once you’ve completed the cash flow statement, answer the
following questions:
i. What does this statement of cash flow tell you about the
sources and uses of the company funds?
ii. Is there anything ABC Company can do to improve the cash
flow?
iii. Can this project be financed with current cash flow from the
company? Why or why not?
iv. If the company needs additional financing beyond what ABC
Company can provide internally (either now or sometime
throughout the life of the project), how would you suggest the
company obtain the additional financing, equity or corporate
debt, and why?
III. Product cost: ABC Company believes that it has an
additional 5,000 machine hours available in the current facility
before it would need to expand. ABC Company uses machine
hours to allocate the fixed factory overhead, and units sold to
allocate the fixed sales expenses. Bases on current research,
ABC Company expects that it will take twice as long to produce
the expansion product as it currently takes to produce its
existing product.
a. What is the product cost for the expansion product under
absorption and variable costing?
b. By adding this new expansion product, it helps to absorb the
fixed factory and sales expenses. How much cheaper does this
expansion make the existing product?
c. Assuming ABC Company wants a 40% gross margin for the
new product, what selling price should it set for the expansion
product?
d. Assuming the same sales mix of these two products, what are
the contribution margins and break-even points by product?
IV. Potential investments to accelerate profit: ABC company
has the option to purchase additional equipment that will cost
about $42,000, and this new equipment will produce the
following savings in factory overhead costs over the next five
years:
Year 1, $15,000
Year 2, $13,000
Year 3, $10,000
Year 4, $10,000
Year 5, $6,000
ABC Company uses the net-present-value method to analyze
investments and desires a minimum rate of return of 12% on the
equipment.
a. What is the net present value of the proposed investment
(ignore income taxes and depreciation)?
b. Assuming a 5-year straight-line depreciation, how will this
impact the factory’s fixed costs for each of the 5 years (and the
implied product costs)? What about cash flow?
c. Considering the cash flow impact of the equipment as well as
the time-value of money, would you recommend that ABC
Company purchases the equipment? Why or why not?
V. Conclusion:
a. What are the major risk factors that you see in this project?
b. As the controller and a management accountant, what is your
responsibility to this project?
c. What do you recommend the CEO do?
Writing the Final Paper
1. Must be six to eight double-spaced pages in length, and
formatted according to APA style as outlined in the Ashford
Writing Center.
2. Must include a title page with the following:
a. Title of paper
b. Student’s name
c. Course name and number
d. Instructor’s name
e. Date submitted
3. Must begin with an introductory paragraph that has a
succinct thesis statement.
4. Must address the topic of the paper with critical thought.
5. Must end with a conclusion that reaffirms your thesis.
6. Must document at least three, but no more than five sources
in APA style, as outlined in the Ashford Writing Center.
7. Must include a separate reference page, formatted
according to APA style as outlined in the Ashford Writing
Center.

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Appendix  A  Future value in.docx

  • 1. Appendix A Future value interest factor of $1 per period at i% for n periods, FVIF(i,n). P eriods RATE PER PERIOD 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 1 1.010 1.020 1.030 1.040 1.050 1.060 1.070 1.080 1.090 1.100 2 1.020 1.040 1.061 1.082 1.103 1.124 1.145 1.166 1.188 1.210 3 1.030 1.061 1.093 1.125 1.158 1.191 1.225 1.260 1.295 1.331
  • 2. 4 1.041 1.082 1.126 1.170 1.216 1.262 1.311 1.360 1.412 1.464 5 1.051 1.104 1.159 1.217 1.276 1.338 1.403 1.469 1.539 1.611 6 1.062 1.126 1.194 1.265 1.340 1.419 1.501 1.587 1.677 1.772 7 1.072 1.149 1.230 1.316 1.407 1.504 1.606 1.714 1.828 1.949 8 1.083 1.172 1.267 1.369 1.477 1.594 1.718 1.851 1.993 2.144 9 1.094 1.195 1.305 1.423 1.551 1.689 1.838 1.999 2.172 2.358 10 1.105 1.219 1.344 1.480 1.629 1.791 1.967 2.159 2.367 2.594 11 1.116 1.243 1.384 1.539 1.710 1.898 2.105 2.332 2.580 2.853 12 1.127 1.268 1.426 1.601 1.796 2.012 2.252 2.518 2.813 3.138 13 1.138 1.294 1.469 1.665 1.886 2.133 2.410 2.720 3.066 3.452 14 1.149 1.319 1.513 1.732 1.980 2.261 2.579 2.937 3.342 3.797 15 1.161 1.346 1.558 1.801 2.079 2.397 2.759 3.172 3.642 4.177 16 1.173 1.373 1.605 1.873 2.183 2.540 2.952 3.426 3.970 4.595 17 1.184 1.400 1.653 1.948 2.292 2.693 3.159 3.700 4.328 5.054 18 1.196 1.428 1.702 2.026 2.407 2.854 3.380 3.996 4.717 5.560 19 1.208 1.457 1.754 2.107 2.527 3.026 3.617 4.316 5.142 6.116 20 1.220 1.486 1.806 2.191 2.653 3.207 3.870 4.661 5.604 6.727 25 1.282 1.641 2.094 2.666 3.386 4.292 5.427 6.848 8.623
  • 3. 10.835 30 1.348 1.811 2.427 3.243 4.322 5.743 7.612 10.063 13.268 17.449 35 1.417 2.000 2.814 3.946 5.516 7.686 10.677 14.785 20.414 28.102 40 1.489 2.208 3.262 4.801 7.040 10.286 14.974 21.725 31.409 45.259 50 1.645 2.692 4.384 7.107 11.467 18.420 29.457 46.902 74.358 117.391 Future value interest factor of $1 per period at i% for n periods, FVIF(i,n). P eriods RATE PER PERIOD 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 1 1.110 1.120 1.130 1.140 1.150 1.160 1.170 1.180 1.190 1.200 2 1.232 1.254 1.277 1.300 1.323 1.346 1.369 1.392 1.416 1.440 3 1.368 1.405 1.443 1.482 1.521 1.561 1.602 1.643 1.685 1.728 4 1.518 1.574 1.630 1.689 1.749 1.811 1.874 1.939 2.005 2.074 5 1.685 1.762 1.842 1.925 2.011 2.100 2.192 2.288 2.386 2.488 6 1.870 1.974 2.082 2.195 2.313 2.436 2.565 2.700 2.840 2.986 7 2.076 2.211 2.353 2.502 2.660 2.826 3.001 3.185 3.379 3.583 8 2.305 2.476 2.658 2.853 3.059 3.278 3.511 3.759 4.021
  • 4. 4.300 9 2.558 2.773 3.004 3.252 3.518 3.803 4.108 4.435 4.785 5.160 10 2.839 3.106 3.395 3.707 4.046 4.411 4.807 5.234 5.695 6.192 11 3.152 3.479 3.836 4.226 4.652 5.117 5.624 6.176 6.777 7.430 12 3.498 3.896 4.335 4.818 5.350 5.936 6.580 7.288 8.064 8.916 13 3.883 4.363 4.898 5.492 6.153 6.886 7.699 8.599 9.596 10.699 14 4.310 4.887 5.535 6.261 7.076 7.988 9.007 10.147 11.420 12.839 15 4.785 5.474 6.254 7.138 8.137 9.266 10.539 11.974 13.590 15.407 16 5.311 6.130 7.067 8.137 9.358 10.748 12.330 14.129 16.172 18.488 17 5.895 6.866 7.986 9.276 10.761 12.468 14.426 16.672 19.244 22.186 18 6.544 7.690 9.024 10.575 12.375 14.463 16.879 19.673 22.901 26.623 19 7.263 8.613 10.197 12.056 14.232 16.777 19.748 23.214 27.252 31.948 20 8.062 9.646 11.523 13.743 16.367 19.461 23.106 27.393 32.429 38.338 25 13.585 17.000 21.231 26.462 32.919 40.874 50.658 62.669 77.388 95.396 30 22.892 29.960 39.116 50.950 66.212 85.850 111.065 143.371 184.675 237.376 35 38.575 52.800 72.069 98.100 133.176 180.314 243.503 327.997 440.701 590.668 40 65.001 93.051 132.782 188.884 267.864 378.721 533.869 750.378 1,051.668 1,469.772 50 184.565 289.002 450.736 700.233 1,083.657 1,670.704 2,566.215 3,927.357 5,988.914 9,100.438
  • 5. Your answer is CORRECT. Differentiate the function a) b) c) d) e) Question 2 Your answer is CORRECT. Calculate the derivative of the given function: a) b) c) d) e) Question 3
  • 6. Your answer is CORRECT. Determine the values of x for which f '(x) = 0, given that a) b) c) d) e) Question 4 Your answer is INCORRECT. Determine the values of x for which f '(x) < 0, given that a) (-∞, - 2 ⁄3) ∪ (0, 2 ⁄3) b) (- 2 ⁄3, 0) ∪ ( 2 ⁄3, ∞) c) (-
  • 7. 3 ⁄2, 0) ∪ ( 3 ⁄2, ∞) d) (- 3 ⁄2, 3 ⁄2) e) (-∞, - 3 ⁄2) ∪ (0, 3 ⁄2) Question 5 Your answer is CORRECT. Calculate the derivative of the given function: a) b) c) d) e) Question 6
  • 8. Your answer is CORRECT. Calculate the derivative of the given function: a) b) c) d) e) Question 7 Your answer is CORRECT. Calculate the derivative of the given function: a) b) c) d) e) Question 8 Your answer is CORRECT. Find the indicated derivative.
  • 9. a) b) c) d) e) Question 9 Your answer is CORRECT. Find dy ⁄dx . a) b) c) d) e) Question 10 Your answer is CORRECT. Find the second derivative. a)
  • 10. b) c) d) e) Question 11 Your answer is INCORRECT. Use differentials to estimate the value indicated. a) 273 ⁄50 b) 223 ⁄50 c) 2 d) 124 ⁄25 e) 126 ⁄25
  • 11. Question 12 Your answer is INCORRECT. Use differentials to estimate the value indicated. a) 323 ⁄160 b) 243 ⁄160 c) 403 ⁄160 d) 317 ⁄160 e) 13 ⁄5 Question 13 Your answer is CORRECT. Use differentials to estimate the value indicated.
  • 12. a) b) c) d) e) Question 14 Your answer is CORRECT. Use one iteration of the Newton-Raphson method to estimate a root of the equation f(x) = 0 starting at the indicated value of x. a) -7 b) 97 ⁄14 c) 47 ⁄7 d) 99 ⁄14
  • 13. e) 51 ⁄7 Question 15 Your answer is CORRECT. Use one iteration of the Newton-Raphson method to estimate a root of the equation f(x) = 0 starting at the indicated value of x. a) 7 b) -8 c) 81 ⁄40 d) 79 ⁄40 e) -3 Question 16 Your answer is CORRECT. The function f is graphed below on the interval [0,10].Give the number of valuesc between 0 and 10 which satisfy the conclusion of the mean value theorem for f.
  • 14. a) 1 b) 5 c) 2 d) 3 e) 4 Question 17 Your answer is CORRECT. Determine if Rolles Theorem applies to the given function on [0,1]. If so, find all numbers c on the interval that satisfy the theorem. a) b) c) d) e) Question 18 Your answer is INCORRECT. Determine if Rolles Theorem applies to the given function on [0,π]. If so, find all numbers c on the interval
  • 15. that satisfy the theorem. a) b) c) d) e) Question 19 Your answer is CORRECT. Determine if the given function satisfies the Mean Value Theorem on [4,49]. If so, find all numbers c on the intervals that satisfy the theorem. a) b) c) d) e) Question 20 Your answer is CORRECT. Determine if the given function satisfies the Mean Value Theorem on [0,2]. If so, find all numbers c on the interval that satisfy the theorem.
  • 16. a) b) c) d) e) ABC Co Consolida Financial InfoABC Company's current financial information (before/without expansion)Dec. 31,20X2 Dec. 31,20X1 Cash $ 50,000$ 70,000Accounts receivable (net) $ 120,000$ 180,000Merchandise inventory $ 350,000$ 280,000Property plant, & equipment $ 400,000$ 300,000Less: Accumulated depreciation $ (170,000)$ (100,000)Total assets $ 750,000$ 730,000Accounts payable $ 250,000$ 210,000Income taxes payable $ 40,000$ 10,000Common stock $ 240,000$ 240,000Retained earnings $ 220,000$ 270,000Total liabilities & stock, equity $ 750,000$ 730,000The firm's accrual-basis income statement revealed the following data:Sales$ 1,200,000Cost of goods sold$ 800,000selling and administrative expenses$ 250,000Depreciation expense$ 70,000Income taxes$ 30,000Dividends declared and paid during 19X2 $ 100,000ABC purchased $100,000 of equipment for cash on August 14.(There was no interest expense.) ABC Co Product informationBased on Chapter 5's exercise 5ABC's Product informationCurrent ProductExpansion Product (estimate)Selling Price$14.50?Units produced and expected to be sold80,0005,000Machine Hours40,0005,000Direct
  • 17. Materials$1.30 per unit$5.60 per unitDirect labor dollars needed per product$2.80 per unit$4.00 per unitVariable Factory Overhead$1.00 per Machine Hour$1.00 per Machine HourVariable Selling Expense$0.20 per unit$0.20 per unitTotal Fixed Costs:Fixed Factory Overhead$ 198,000Fixed Selling expenses$ 191,250 Focus of the Final Paper You’ve just been hired onto ABC Company as the corporate controller. ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles. The company currently has annual sales of around $1.2 million, a 25% increase from the previous year. The company has an aggressive growth target of reaching $3 million annual sales within the next 3 years. The CEO has been trying to find additional products that can leverage the current ABC employee skillset as well as the manufacturing facilities. As the controller of ABC Company, the CEO has come to you with a new opportunity that he’s been working on. The CEO would like to use the some of the shingle scrap materials to build cedar dollhouses. While this new product line would add additional raw materials and be more time-intensive to manufacture than the cedar shingles, this new product line will be able to leverage ABC’s existing manufacturing facilities as well as the current staff. Although this product line will require added expenses, it will provide additional revenue and gross profit to help reach the growth targets. The CEO is relying on you to help decide how this project can be afforded Provide details about the estimated product costs, what is needed to break even on the project, and what level of return this product is expected to provide. In order to help out the CEO, you need to prepare a six- to eight-page report that will contain the following information
  • 18. (including exhibits, but excluding your references and title page). Refer to the accompanying Excel spreadsheet (available through your online course) for some specific cost and profit information to complete the calculations. Final Paper Spreadsheet I. An overall risk profile of the company based on current economic and industry issues that it may be facing. II. Current company cash flow a. You need to complete a cash flow statement for the company using the direct method. b. Once you’ve completed the cash flow statement, answer the following questions: i. What does this statement of cash flow tell you about the sources and uses of the company funds? ii. Is there anything ABC Company can do to improve the cash flow? iii. Can this project be financed with current cash flow from the company? Why or why not? iv. If the company needs additional financing beyond what ABC Company can provide internally (either now or sometime throughout the life of the project), how would you suggest the company obtain the additional financing, equity or corporate debt, and why? III. Product cost: ABC Company believes that it has an additional 5,000 machine hours available in the current facility before it would need to expand. ABC Company uses machine hours to allocate the fixed factory overhead, and units sold to allocate the fixed sales expenses. Bases on current research, ABC Company expects that it will take twice as long to produce the expansion product as it currently takes to produce its existing product. a. What is the product cost for the expansion product under
  • 19. absorption and variable costing? b. By adding this new expansion product, it helps to absorb the fixed factory and sales expenses. How much cheaper does this expansion make the existing product? c. Assuming ABC Company wants a 40% gross margin for the new product, what selling price should it set for the expansion product? d. Assuming the same sales mix of these two products, what are the contribution margins and break-even points by product? IV. Potential investments to accelerate profit: ABC company has the option to purchase additional equipment that will cost about $42,000, and this new equipment will produce the following savings in factory overhead costs over the next five years: Year 1, $15,000 Year 2, $13,000 Year 3, $10,000 Year 4, $10,000 Year 5, $6,000 ABC Company uses the net-present-value method to analyze investments and desires a minimum rate of return of 12% on the equipment. a. What is the net present value of the proposed investment (ignore income taxes and depreciation)? b. Assuming a 5-year straight-line depreciation, how will this impact the factory’s fixed costs for each of the 5 years (and the implied product costs)? What about cash flow? c. Considering the cash flow impact of the equipment as well as the time-value of money, would you recommend that ABC Company purchases the equipment? Why or why not? V. Conclusion: a. What are the major risk factors that you see in this project? b. As the controller and a management accountant, what is your responsibility to this project?
  • 20. c. What do you recommend the CEO do? Writing the Final Paper 1. Must be six to eight double-spaced pages in length, and formatted according to APA style as outlined in the Ashford Writing Center. 2. Must include a title page with the following: a. Title of paper b. Student’s name c. Course name and number d. Instructor’s name e. Date submitted 3. Must begin with an introductory paragraph that has a succinct thesis statement. 4. Must address the topic of the paper with critical thought. 5. Must end with a conclusion that reaffirms your thesis. 6. Must document at least three, but no more than five sources in APA style, as outlined in the Ashford Writing Center. 7. Must include a separate reference page, formatted according to APA style as outlined in the Ashford Writing Center.