Required Determine the effect each of the following situations would have on monthly profits. Each situation should be evaluated independently of all others. a. Product A is discontinued. b. Product A is discontinued, and the subsequent loss of customers causes sales of Product B to decline by 150 units. c. The selling price of A is increased to $25 with a sales decrease of 250 units. d. The price of Product B is increased to $20 with a resulting sales decrease of 300 units. However, some of these customers shift to Product A; sales of Product A increase by 200 units. e. Product A is discontinued, and the plant in which A was produced is used to produce D, a new prod- uct. Product D has a unit contribution margin of $2. Monthly sales of Product D are predicted to be 1,500 units. f. The selling price of Product C is increased to $35, and the selling price of Product B is decreased to $10. Sales of C decline by 350 units, while sales of B increase by 400 units.

Required a. Determine the unit cost for each job using a traditional plantwide overhead rate based on machine hours. b. Determine the unit cost for each job using ABC. (Round answers to two decimal places.) c. As the manager of Ridgeland, is there additional information that you would want to help you evalu- ate the pricing and profitability of Jobs 201 and 202? d. Assuming the company has been using the method required in part a, how should management react to the findings in part b?

The Train Co. can purchase a new machine for $30,000 that will provide net cash inflows of $12,000 for five years, after which the machine will be sold for junk for $1,500. The present value of $1 at 12% received after 5 periods is 0.56743, and the present value of an annuity of $1 for 5 periods at 12% is 3.60478. Calculate the net present value of the new machine if the required rate of return is 12%.

The Cornell Co. is considering replacing one of its weaving machines with a new, more efficient machine. The old machine is being depreciated on a straight-line basis down to a salvage value of zero over the next 5 years. It has a book value of $200,000 and could be sold for $120,000. The replacement machine would cost $600,000 and have an expected life of 5 years, after which it could be sold for $100,000. Because of reductions in defects and material savings, the new machine would produce cash benefits of $180,000 per year before depreciation and taxes. The present value of $1 at 15% received after 5 periods at 15% is 0.49718. The present value of an annuity of $1 for 4 periods at 15% is 2.85498, and for 5 periods is 3.35216. Assuming straight-line depreciation, a 40% marginal state and federal tax rate, and a required rate of return of 15%, find: a. the payback period; and b. the net present value.

Question 7) What are the main reasons why project budgets are exceeded?

Using the profitability index method, determine which project, if either, should be accepted by the company.