accounting questions

Questions 3 and 4 refer to the following information: X Company is considering buying a part next year that it currently makes. A company has offered to supply this part for $15.32 per unit. This year's total production costs for 51,000 units were:

$127,500 of X Company's total overhead costs were variable; $14,586 of X Company's fixed overhead costs can be avoided if it buys the part. If X Company buys the part, there are no alternative uses of the resources that were used for its production. Production next year is expected to increase to 54,450 units. 3. If X Company continues to make the part instead of buying it, it will save ______

4. X Company has an opportunity to negotiate the purchase price with the supplier. What purchase price would make X Company indifferent between making and buying?  ________

Questions 5, 6, and 7 refer to the following information

The following cost functions apply to X Company's regular production and sales during the year:

·   Cost of goods sold:   $6.01 (X) + $129,816

·   Selling and administrative expenses:   $1.20 (X) + $68,514

where X is the number of units produced and sold. During the year, X Company sold 60,100 units for $18.00 each. At the end of the year, a company offered to buy 4,400 units but was only willing to pay $11.00 each. X Company had the capacity to produce the additional 4,400 units.  5. If X Company had accepted the special order, firm profits would have increased by _______

8. The following are the budgeted profit functions for X Company's two products, A and B, next year:

· Product A:   P = .40 (R) - $58,150

· Product B:   P = .41 (R) - $24,410

where R is revenue. Budgeted revenue for the two products are $89,000 and $92,000, respectively. Unavoidable fixed costs for the two products are $20,352 and $10,252, respectively. The company is considering dropping Product A; if it does, the resulting freed-up resources can be used to increase revenue from sales of Product B by _______$17,900, with no additional fixed costs. If X Company drops A and increases revenue from B, firm profits will change by _______

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9. X Company is unhappy with a machine that they bought just a year ago for $43,000. It is considering replacing it with a new machine that will save significant operating costs. Operating costs with the current machine are $66,000 per year; operating costs with the new machine are expected to be $50,000 per year. Both machines will last for 6 more years.The current machine can be sold immediately for $4,000 but will have no salvage value at the end of 6 years. The new machine will cost $71,000 and have a salvage value of $2,500 in 6 years. Assuming a discount rate of 4%, what is the net present value of replacing the current machine? _______

10. X Company has an opportunity to accept a special order that will result in immediate profit of $53,000. The marketing manager believes that if X Company accepts the order, the company will lose regular customers. Specifically, she believes the effect will be lost profits of $9,500 in each of the next 4 years.  Assuming a discount rate of 8%, what is the net present value of accepting the special order? ______

11. X Company is considering launching a new product. After conducting a market research study that cost $4,200, the company estimates sales of 8,400 units in each of the next 4 years, with a contribution margin of $6.00 per unit. Additional fixed costs will be $18,116. Equipment costing $120,000 will have to be purchased; the equipment will have no salvage value at the end of 4 years. What is the internal rate of return of launching the new product?  [Submit your rate as a decimal: .XX] _________