Advanced Finance 1. Homework Investment Analysis 1. Question Rainbow Products Savings - $5000/year Machine costs $35.000 Expected to last for 15 years Cost of capital 12% A. payback?‚ NPV?‚ IRR? Payback: The amount of time required for a firm to recover its initial investment. by dividing the initial investment by the annual cash inflow. In our case $35.000/$5000= 7years NPV: Investment- the PV of its cash inflows discounted at a rate( the firm’s cost of capital)
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Running Head: REDUCING COST Reducing Cost [Name of Customer] [Name of Institute] [English Literature] Reduce Cost Ways to reduce Cost In the unpredictable economic times prevalent contemporarily‚ organizations and economies all over the world are devising strategies that can prove effective in providing them sanctuary from the looming threat of increasing expenditures. However‚ there are a number of ways through which these expenses can be controlled in an intelligent and less intimidating
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Chapter 4: Costs and Cost Minimization Multiple Choice 1. Suppose you are a star basketball player at a major university in your sophomore year. You are sought after by several NBA teams. Which of the following choices best characterizes your opportunity cost if you choose to drop out of college and enter the NBA? a) The value of your college scholarship that you have given up. b) The skills that two more years of playing at your college would have given you along with their additional value
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Best practice for DHL to reduce cost of Material Labor and‚ overheads Create visibility to create control. Companies are finding that inadequate transportation spend visibility is leading to unanticipated budget discrepancies‚ unexpectedly low product margins‚ and‚ in some cases‚ higher rather than lower total costs when sourcing from low-cost countries. As Figure 1 shows‚ international transportation expense is the top area for budget discrepancies.
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Midterm2Practice Key 1. The following data have been recorded for recently completed Job 501 on its job cost sheet. Direct materials cost was $3‚067. A total of 30 direct labor-hours and 104 machine-hours were worked on the job. The direct labor wage rate is $12 per labor-hour. The company applies manufacturing overhead on the basis of machinehours. The predetermined overhead rate is $11 per machine-hour. The total cost for the job on its job cost sheet would be: A. $4‚571 B. $3‚757 C. $3‚090 D
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available to a firm facing competition from manufacturers enjoying a substantial labor cost advantage? Changing a new cost system‚ focusing on customer needs. What issues are relevant in considering moving a manufacturing plant to a low wage location? Direct labor is an important factor‚ which is more relevant on manufacture of a product. Was Schroeder’s differentiation strategy
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1. What is the competitive environment of ETO? ETO‚ Electronic Testing Operations‚ provides centralized testing for electronic components such as integrated circuits. Because low-technology outside laboratories were often cheaper‚ expecially on larger lots‚ due to no engineering part‚ ETO has to shift from simple inspection services to more technically sophisticated services. 2. Describe the existing cost system and calculate the cost of the 5 components in the case. What is wrong with the
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Page 1. Page 1 1. Indirect labor is a part of: B. Conversion cost. Labor that cannot be physically traced to particular product is treated as indirect labor and as manufacturing overhead. Conversion cost is the sum of direct labor and manufacturing overhead. These costs are incurred to convert materials into the finished product. Indirect labor is treated as part of manufacturing overhead. 2. Prime cost and conversion cost share what common element of total cost? B. Direct labor. Prime
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Company‚ Estrella has decided to install a new machine. Management is considering buying and leasing in the form of financial statements‚ so costs affect net profit of the company. In deciding whether to lease or purchase of the machine it is necessary to learn what each option‚ and the cash flows of the parameters to select will give the highest return of investment-related cash flow. Net present value (NPV) is used to decide whether to buy or lease of machines‚ and represents the cash flow associated
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CONTROLLING LABOR COST The timekeeping and payroll departments have the responsibility of maintaining labor records. The timekeeping and payroll functions may be established as separate departments or organized as subdivisions of a single department. Increasingly‚ automated timekeeping technology has replaced ‘‘timekeeping’’ as a separate department. For example‚ many companies issue magnetic cards to direct laborers who use them to ‘‘log on’’ and ‘‘log off’’ to specific job assignments. They
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