A technology manufacturing company needs to purchase a new piece of assembly equipment. The two choices...
A technology manufacturing company needs to purchase a new piece
of assembly equipment. The two
choices are a conventional machine and an automated machine.
Profitability will depend on a future
demand volume. The information below shows an estimate of net
present value of profit over the next 3 years.
Decision， Demand Volume – Low， Demand Volume – High
Conventional Machine， ($5,000) ，$125,000
Automated Machine ，($10,000) ，$132,000
Given the uncertainty associated with the demand volume, discuss
how you would make a decision.
What other information would be helpful in the decision
process?
Homework Answers
I would consider that low and high demands are equally likely and find the expected value for each decision
>> If there is more information on the probabilities of each demand condition, the decision making would have been better
Add Answer to:
A technology manufacturing company needs to purchase a new piece
of assembly equipment. The two
choices...
Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs...
Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, whereas the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years. Demand Volume Decision Low Medium High Basic model $60,000 $110,000 $160,000 Advanced model $55,000 $125,000 $165,000 Fill in the table below for maximum and minimum profit payoffs under each model. Round your answers to the...
13. A manufacturing company, called "Manufacturing Co", must purchase new equipment for one of its assembly...
13. A manufacturing company, called "Manufacturing Co", must purchase new equipment for one of its assembly lines. Three different options (A, B, and C) are under consideration. Option A, which has an acquisition cost of $110,000, is standard equipment that has already been on the market for a number of years. Options B and C are new equipment recently developed by a new company, called "EquipmentCo". EquipmentCo will offer a reduced price of $75,000 for option B and $25,000 for...
The electronics company plans to replace the manually operated manufacturing machine with a new fully automated...
The electronics company plans to replace the manually operated manufacturing machine with a new fully automated machine. Use the following information to determine the cash flows and profitability of the replacement decision. Current situation • Current estimated wages of operators are 30,000 annually. By replacing, we can save these labour related costs. • Maintenance costs € 8,000 per year. • Waste related costs of € 10,000 per year • The machine currently in use was bought 5 years ago for...
A manufacturer is considering two investment programs to supply a new transportation-related technology. Market research anticipates...
A manufacturer is considering two investment programs to supply a new transportation-related technology. Market research anticipates rapid market growth: sales are expected to be 100,000 the first year, 200,000 the second, 300,000 the third and 400,000 the fourth year. However, the company recognizes that actual sales may differ by 15%. The net profit per item sold is $750. The company has three plans to produce the units: Plan A. Build a single plant today that could produce up to 400,000...
FireWorks produces mild-steel outdoor products, including two firepit models. The bulk of firepit sales come from...
FireWorks produces mild-steel outdoor products, including two firepit models. The bulk of firepit sales come from their standard firepit – a basic half-sphere design. FireWorks’ custom firepit involves innovative designs and some intricate cutting work and, although sales volume is low, custom firepits generate a significantly higher sales price. Increasingly, FireWorks has been struggling competitively on price with its standard product although its custom firepits are a flaming success. Currently, FireWorks uses a simple job-costing system and allocates overhead based...
Office Oulet LTD. produces and sells printing products across Canada
OFFICE OUTLET LTD. Office Oulet LTD. produces and sells printing products across Canada. Last year, sales volume totaled $850,000. Volume for the first five months of the current year totaled $600,000, and sales were expected to be $1.6 million for the entire year. Unfortunately, the printing business in the region where Office Depot is located is extremely competitive. More than 100 printing shops are all competing for the same business. The company currently manufactures one type of high-quality printer with the average...
Manchester Technology, Inc, manufactures several different types of printed circuit boards; however, two of the...
Manchester Technology, Inc, manufactures several different types of printed circuit boards; however, two of the boards account for the majority of the company's sales. The first of these boards, a television circuit board, has been a standard in the industry for several years. The market for this type of board is competitive and price-sensitive. Manchester plans to sell 83,000 of the TV boards in 20x1 at a price of $490 per unit. The second high-volume product, a personal computer circuit...
Product-Costing Accuracy, Corporate Strategy, ABC Autotech Manufacturing is engaged in the production of replacement parts for...
Product-Costing Accuracy, Corporate Strategy, ABC Autotech Manufacturing is engaged in the production of replacement parts for automobiles. One plant specializes in the production of two parts: Part #127 and Part #234. Part #127 produced the highest volume of activity, and for many years it was the only part produced by the plant. Five years ago, Part #234 was added. Part #234 was more difficult to manufacture and required special tooling and setups. Profits increased for the first three years after...
Problem One: Variance Analysis The Graves Manufacturing Company's costing system has two direct-cost categories: direct materials...
Problem One: Variance Analysis The Graves Manufacturing Company's costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor-hours (DLH). At the beginning of 2017, the controller adopted the following standards for its manufacturing costs: 5 lb. at $5 per lb. 3 hrs. at $15 per hr. Direct materials Direct manufacturing labor Manufacturing overhead: Variable Fixed $7 per DLH $8 per...
HANDY SEW COMPANY Managerial Finance Concept: Managing inventory by minimi
HANDY SEW COMPANY Managerial Finance Concept: Managing inventory by minimizing inventory cost Financial Analysis Technique: Economic order Quantity Decision Context: A manufacturer of hand-held sewing machine wants to determine the optimum inventory and safety stock levels for precision parts. Andy Soo, owner and general manager of Handy Sew Company, a start-up business, was preparing the inventory plan for his company for the next five years. The company was set up to manufacture, assemble and sell hand-held sewing...
13. A manufacturing company, called "Manufacturing Co", must purchase new equipment for one of its assembly lines. Three different options (A, B, and C) are under consideration. Option A, which has an acquisition cost of $110,000, is standard equipment that has already been on the market for a number of years. Options B and C are new equipment recently developed by a new company, called "EquipmentCo". EquipmentCo will offer a reduced price of $75,000 for option B and $25,000 for...
Manchester Technology, Inc, manufactures several different types of printed circuit boards; however, two of the boards account for the majority of the company's sales. The first of these boards, a television circuit board, has been a standard in the industry for several years. The market for this type of board is competitive and price-sensitive. Manchester plans to sell 83,000 of the TV boards in 20x1 at a price of $490 per unit. The second high-volume product, a personal computer circuit...
Problem One: Variance Analysis The Graves Manufacturing Company's costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor-hours (DLH). At the beginning of 2017, the controller adopted the following standards for its manufacturing costs: 5 lb. at $5 per lb. 3 hrs. at $15 per hr. Direct materials Direct manufacturing labor Manufacturing overhead: Variable Fixed $7 per DLH $8 per...
Most questions answered within 3 hours.
-
(2) For the following questions, consider a data set that
exhibits a normal distribution. Report the...
asked 27 seconds from now -
What exactly is an information system? How does it work" What
are its people organization,
...
asked 1 minute ago -
The Food Marketing Institute shows that 17% of households spend
more than $100 per week on...
asked 10 minutes ago -
Go to NCBI BLAST search web page
1st search: GEKDLRRAKDINQEVYNF
2nd search: PTSQRLQLLEPFDK
3rd search: GEKDLRRAKDINQEVYNF...
asked 14 minutes ago -
Explain how each of the following three conditions could be a
red flag for a register...
asked 18 minutes ago -
In a two-way factorial ANOVA, the final F-ratio for
factor AxB is determined by dividing _____...
asked 49 minutes ago -
Show your solutions for answer.
4. An aqueous solution contains 9.21 g of
K4Fe(CN)6 in a...
asked 19 minutes ago -
The random variable X has a uniform distribution with values
between 16 and 18. What is...
asked 28 minutes ago -
Evaluate each of the following transactions in terms of their
effect on assets, liabilities, and equity....
asked 27 minutes ago -
The amounts of nicotine in a certain brand of cigarette are
normally distributed with a mean...
asked 48 minutes ago -
The commercial lending department of First Bank made a
substantial loan to Alpha Company after obtaining...
asked 33 minutes ago -
For a reaction, reagents --->products, it's forwarding rate
(rate of products formation) is proportional to the...
asked 46 minutes ago