Clark Paints Capital Budgeting - Managerial Accounting

Data: damage of in the buff equipment 200,000 Expected life of equipment5 government activity value in 5 years 40,000 tone use up - number of cans 5,500,000 one-year production or grease ones palms ineluctably 1,100,000 Number of workers needed 3 one-year hours to be worked per employee 2,000 sugar per hour for employees 12.00 annual health benefits per employee 2,500 different yearly benefits per employee - % of wages18% Cost of raw materials per can0.25 Other variable production costs per can0.05 cost to corrupt cans - per can0.45 Required rate of return12% revenue income rate35% Cost to conjure up:Make barter for yearly cost of direct materials: look at of 1,100,000 cans per year 330,000 Annual cost of direct labor for new employees Wages 72,000 health Benefits 7,500 Other Benefits 12,960 rack up wages and benefits 92,460 Total annual production costs 422,460 Annual cost to corrupt cans 495,000 vocalizatio n 1: Cash flows over the life of the visit Before tax revenueTax EffectAfter Tax Item Annual money savings (make vs buy) 72,540 0.

65 47,151 Tax savings due to break-dance and tear 32,000 0.35 11,200 Total annual cash flow 58,351 Part 2: Payback period $200,000 / $58,3513.4years Part 3: Annual rate of return Accounting income as result of lessen costs Annual cash savings (before tax effect) 72,540 weensy Depreciation (32,000) Before tax income 40,540 Tax at 35% rate (14,189) After tax Income 26,351 $26,351 / $200,00013.18% Part 4: toss Present ValueBefore taxAfter tax12% PVPr esent ItemYearamountTax % totFactorValue C! ost of Machine0...

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