Question

Your company manufactures widgets. The fixed cost incurred (independent of the number of widgets produced) each year is $80,000. The variable cost per widget is $0.25. The sale price of each widget is $1.00. The price and the costs are expected to remain unchanged over time. In year 1, the company expects to sell 100,000 widgets. It expects its sales to increase at the rate of 4% a year forever. The discount rate is 10%. Ignore taxes. What is the value of this company?

Please show your work and explain your answer!

Answer #1

2. Your company manufactures widgets. The fixed cost incurred
(independent of the number of widgets produced) each year is
$80,000. The variable cost per widget is $0.25. The sale price of
each widget is $1.00. The price and the costs are expected to
remain unchanged over time. In year 1, the company expects to sell
100,000 widgets. It expects its sales to increase at the rate of 4%
a year forever. The discount rate is 10%. Ignore taxes. What is...

Widget Inc. manufactures widgets. The company has the capacity
to produce? 100,000 widgets per? year, but it currently produces
and sells? 75,000 widgets per year. The following information
relates to current? production:
Sales price per unit
$ $45
Variable costs per? unit:
Manufacturing
$25
Marketing and administrative
$5
Total fixed? costs:
Manufacturing
$79,000
Marketing and administrative
$20,000
If a special sales order is accepted for 7,000 widgets at a
price of $37 per? unit, and fixed costs remain? unchanged, how...

1. Company currently has the capacity to manufacture 250,000
widgets a year and 100,000 gadgets a year in its factory. Company
has the following costs related to manufacturing and selling
200,000 widgets:
Scenario 1
Scenario 2
Direct materials and direct labor
$840,000
Variable manufacturing overhead
$180,000
Rent on equipment only used for the widgets
$40,000
Allocated share of depreciation on factory
$100,000
Annual salary of widget production manager
$70,000
Variable selling costs (commissions)
$60,000
Allocated share of fixed selling costs...

Timbuktú, Inc. manufactures and distributes widgets, with an
expected price of $400 each. The variable cost for each unit was
budgeted at $200, and the annual fixed costs were budgeted at
$100,000. Timbuktú's after-tax (must be converted to pre-tax)
profit goal was $240,000; the company's effective tax rate is 40%.
For the first five months of the year sales were 350 units at a
price of $400, with variable costs as planned. In order to meet
expectations, the following alternatives...

Question #1: A company manufactures
widgets. Based on an analysis, we find that each widget
needs 3/4 pound of “gunk.” The following is information on the
budgeted production of widgets in units for the following three
months:
July
August
September
Budgeted
production
21,000
20,000
24,000
We know that this company desires to maintain monthly ending
inventories of “gunk” amounting to 25% of the following month's
budgeted production needs. The cost per pound of “gunk” is
$2.12.
Instructions
Prepare a...

Your firm is considering producing a new variety of widget. You
have already test marketed
the widgets at a cost of $90,000. You estimate sales will be
$500,000 in the first year, $800,000
in the second year, $500,000 in the third year, and zero after
three years.
To produce the new widgets will require an investment in working
capital at year 0 of $50,000.
Net working capital will be 20% of sales in years 1 and 2.
Labor, materials, and...

1. Spring 20 Company has two divisions. Division A
manufactures a part that sells for $90 with a variable cost of $40.
Fixed cost per unit of the part is $20. Division B wants to
purchase the part from Division A. What is the minimum
transfer price if Division A is operating at capacity?
2.
Spring 20 Company manufactures lamps. The company
expects to sell 2,000 lamps for $100 each in April and 2,400 lamps
for $110 each in May. Sales...

Beckstead Company makes a single product called a widget. The
company normally produces and sells 80,000 widgets each year at a
selling price of $40 per unit. The company’s unit cost at this
level of activity is given below:
Direct materials
$ 9.50
Direct labor
10.00
Variable manufacturing overhead
2.80
Fixed manufacturing overhead
5.00
($400,000 total)
Variable selling expenses
1.70
Fixed selling expenses
4.50
($360,000 total)
Total cost per unit
$33.50
Required:
Assume that Beckstead Company has sufficient capacity...

Your firm is considering producing a new variety of widget. You
have already test marketed
the widgets at a cost of $90,000. You estimate sales will be
$500,000 in the first year, $800,000
in the second year, $500,000 in the third year, and zero after
three years.
To produce the new widgets will require an investment in working
capital at year 0 of $50,000.
Net working capital will be 20% of sales in years 1 and 2.
Labor, materials, and...

6. F Company manufactures and sells T-shirts. Last year, the
shirts sold for $7.50 each, and the variable cost to manufacture
them was $2.25 per unit. The company needed to sell 20,000 shirts
to break even. The net income last year was $5,040. F Company’s
expectation for the coming year include the following:-The selling
price of the T-shirts will be $9.00-Variable cost to manufacture
will increase by one-third-Fixed costs will increase by 10%-The
income tax rate of 40% will be...

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