# For each question show the step-by-step work; presenting and submitting the solutions in Excel is re

• September 24, 2021 /

For each question show the step-by-step work; presenting and
submitting the solutions in Excel is required

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Problems

1 Assume
that you have a company and have to make some decisions based on calculated
costs for a line of products You will have to pick your own numbers for the
following costs and for the volume your company produces, and they will be your
givens:

Givens

Units produced & expected to sell

Direct labor

Direct Materials

Variable portion

Fixed portion

Variable portion

Fixed portion

Based on your givens determine the following:

a) The
manufacturing cost per unit

b) The
break-even selling price per unit

c) What
should be your selling price per unit if you want to make a profit of \$100,000?

d) What will
be the unit contribution marginbased on the selling price determined in
question c)?

2 A
construction firm is evaluating the purchase of a new semi-trailer truck The
truckâs base price is \$80,000, but the company will need to modify it at an
additional cost of \$20,000 The truck will be sold after three years for
\$30,000; and it falls into the MACRS five-year class The purchase of this
semi-trailer will have no effect on the firmâs revenues, but it is expected to
save \$45,000 per year in before-tax operating cost, mostly in leasing expenses
The companyâs marginal tax rate (federal plus state) is 40%, and its MARR is
13%

Determine the following:

a) Is this
project acceptable, based on the most likely estimates given in the problem?

Why yes or why not?

b) What is
the break-even interest rate for this project?

c) Will the
project be acceptable if the annual savings will be \$40,000 instead of \$45,000?

This problem will have to be solved by creating the Income
and the Cash Flow Statements