Erosion costs. Fat Tire Bicycle Company currently sells 36,000 bicycles per year. The current bike is a standard balloon-fire bike selling for $110, with a production and shipping cost of $40. The company is thinking of introducing an off-road bike with a projected selling price of $380 and a production and shipping cost of $300. The projected annual sales for the off-road bike are 13,000. The company will lose sales in fat-dire bikes of 7.500 units per year if it introduces the new bike, however. What is the erosion cost from the new bike? Should Fat Tire start producing the off-road bike? What is the erosion cost from the new bike? (Round to the nearest dollar) CLUS
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- Erosion costs. Fat Tire Bicycle Company currently sells 38,000 bicycles per year. The current bike is a standard balloon-tire bike selling for $110, with a production and shipping cost of $35. The company is thinking of introducing an off-road bike with a projected selling price of $400 and a production and shipping cost of $225. The projected annual sales for the off-road bike are 16,000. The company will lose sales in fat-tire bikes of 7,500 units per year if it introduces the new bike, however. What is the erosion cost from the new bike? Should Fat Tire start producing the off-road bike? What is the erosion cost from the new bike? (Round to the nearest dollar.)A vehicle has a first cost of $22,500. Its market value declines by 20% annually. It is used by a firm that estimates the effect of older vehicles on the firm’s image. A new car has no “image cost.” But the image cost of older vehicles climbs by $950 per year. The firm’s MARR is 10%. Find the minimum EUAC for this vehicle and its economic life.The Clap Chemical Company needs a large insulated stainless steel tank to expand its plant. A recently closed brewery has offered to sell their tank for $15,000 delivered. The price is so low that Clap believes it can sell the tank at any future time and recover its $15,000 investment.Erosion costs. Fat Tire Bicycle Company currently sells 40,000 bicycles per year. The current bike is a standard balloon-tire bike selling for$90, with a production and shipping cost of $35. The company is thinking of introducing an off-road bike with a projected selling price of $410 and a production and shipping cost of $360. The projected annual sales for the off-road bike are 12,000. The company will lose sales in fat-tire bikes of 8,000 units per year if it introduces the new bike, however. What is the erosion cost from the new bike? Should Fat Tire start producing the off-road bike? What is the erosion cost from the new bike? $_______ (Round to the nearest dollar.) Should Fat Tire start producing the off-road bike?
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- XYZ Corporation is considering a new product line. The company currently manufactures several lines of snow skiing apparel. The new products, insulated ski shorts, are expected to generate sales less cost of goods sold of P1 million per year for the next five years. They expect that during this five year period, they will lose about P200,000 per year in sales less cost of goods sold on their existing lines of longer ski pants as a result of the introduction of the new product line. The new line will require no additional equipment or space in the plant and can be produced in the same manner as the existing apparel products. The new project will, however, require that the company spend an additional P80,000 per year on insurance in case customers sue for frostbite. Also, a new marketing director would be hired to oversee the line at P45,000 per year in salary and benefits. Because of the different construction of the shorts, an increase in inventory of 3,800 would be required initially.…bright light auto lamps has found that it is indifferent between purchasing a high-capacity vacuum sealing machine or a lower capacity machine as long as sales are above 200 units per month. the price of each sealed beam light is $50. the high-capacity machine has cash expenses of $10,000 per month, while the alternative has cash expenses of $5,000 per month and depreciation and amortisation expenses of $2,000 per month. under high capacity, the variable costs per unit are $10; and they are $40 for the other alternative. if the company bases its decisions on the accounting operating profit break-even, then what are the depreciation expenses under the high-capacity alternative? a. $3,000 b. $4,000 c. $9,000 d. none of the aboveMcGilla Golf is evaluating a new golf club. The clubs will sell for $890 per set and have a variable cost of $395 per set. The company has spent $130,000 for a marketing study that determined the company will sell 45,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8.400 sets of its high-priced clubs. The high-priced clubs sell at $1,390 and have variable costs of $520. The company also will increase sales of Its cheap clubs by 11,000 sets. The cheap clubs sell for $395 and have variable costs of $125 per set. The fixed costs each year will be $9,100,000. The company has also spent $900,000 on research and development for the new clubs. The plant and equipment required will cost $27,300,000 and will be depreciated on a straight-line basis to a zero salvage value. The new clubs will also require an increase in net working capital of $2,200,000 that will be returned at the end of the project. The tax rate is 21 percent, and the…
- Grove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics. Sales price $ 450.00 per unit Variable costs 210.00 per unit Fixed costs 672,000 per year Required: What number must Grove Audio sell annually to break even? What number must Grove Audio sell to make an operating profit of $180,000 for the year?A recently retired professor, Melinda Marketing, plans to establish the Hot-Air FanCompany and manufacture circulating fans. She estimates the fixed cost of operations tobe $357,500 annually. The variable cost of producing the fans is forecasted to be $85 perunit.a. How many fans must be sold to break even if the fans are priced at $150?b. If Hot-Air sells 6,000 fans, what will be the EBIT?c. If Hot-Air sells 6,000 fans and has interest expense of $8,125, what is Hot-Air’stimes-interest-earned? Hot-Air does not have any nonoperating expenses.d. If the fans are priced at $150, what is Hot-Air’s breakeven sales?The Greenleaf Company is considering purchasing a new set of air-electric quill units to replacean obsolete one. The machine currently being usedfor the operation has a market value of zero. However, it is in good working order, and it will last for atleast an additional five years. The new quill units willperform the operation with so much more efficiencythat the firm’s engineers estimate that labor, material,and other direct costs will be reduced $3,000 a year ifthe units are installed. The new set of quill units costs$10,000 delivered and installed, and its economic lifeis estimated to be five years with zero salvage value.The firm’s MARR is 13%.(a) What investment is required to keep the oldmachine?(b) Compute the cash flow to use in the analysis foreach option.