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Requirements for Problem Set 2 Prof. O'Kelly ACCT 2301 Summer 2, 2013 The work is to be completed on an individual basis and should not be discussed with other students in the course. The use of...

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Requirements for Problem Set 2 Prof. O'Kelly ACCT 2301 Summer 2, 2013
The work is to be completed on an individual basis and should not be discussed with other students in the course. The use of outside resources should not be used with the exception of the textbook and course materials. Your signature on the cover page confirms that you have complied with this policy. The assignment should be turned in electronically using Turn-it-in (found in the Assignments tab of Blackboard) by 12 noon on Wednesday, August 14, 2013. You arc also required to bring a hard copy of your answers to the problem set to class and turn it in directly to me at the beginning of class on that day. 1. Answer the problems included in the assignment in order and reference your answers with the corresponding letters a, b, c, d, e, as appropriate. It is important that you make it clear which question you are answering. No introduction or statement of the problem is required. 2. Clearly show all calculations done to arrive at your answers and analyses. Where possible, use Tables and Exhibits to present calculations and quantitative analyses. You will be evaluated on the clarity of the solutions as well as the quality of the analysis. 3. Support your answers with evidence drawn from the facts in the problem along with additional material discussed in class and in the textbook.
4. Calculations are only the beginning of the analysis. You must interpret the calculations and assess their implications and significance for the managerial analysis and decisions under discussion. Be careful to respond directly to the question asked. 5. Type your answers, double-spaced, in 12 point font. Number each page sequentially including exhibits, 6. Type an 8 'A" x 11" cover page that includes your name, instructor name, section time of the course, and the date the case write-up is due. You should also sign your name on the cover page which confirms the following: I completed the assignment on an individual basis and did not discuss the questions or my answers with other students in the course. I did not use any outside resources with the exception of the textbook and course materials. I pledge that the work I am submitting is completely my own.
7 , STAPLE the pages in the upper left-hand corner-. (Paper clips have a nasty habit of coming off, and pages are lost.) Submit only the stapled 8 'A" x 11" pages.
Answered Same Day Dec 29, 2021

Solution

David answered on Dec 29 2021
113 Votes
1
Managerial Accounting
Student’s Name:
Instructor’s Name:
Section time:
Due Date:
2
SOLUTION 1A:
Particulars Existing New
Unit-Level Labor Costs $ 200,000.00 $ 120,000.00
($200,000*(1-40%))
Depreciation Expenses on Equipment $ 30,000.00 $ 50,000.00
Yearly Relevant Cost of Operation $ 230,000.00 $ 170,000.00
Period of Operation 4.00 4.00
Total Relevant Cost of Operation $ 920,000.00 $ 680,000.00
Depreciation on New Equipment = (Purchase Cost – Salvage Value) / Useful Life
Depreciation on New Equipment = ($240,000 - $40,000) / 4 years
Depreciation on New Equipment = $50,000
The above relevant cost analysis does not include lease revenue which can be obtained by
leasing the old equipment.
SOLUTION 1B:
Particulars Amount
Savings in Operating Cost ($230,000-$170,000) $ 60,000.00
Add: Revenue from leasing old equipment $ 20,000.00
Total Additional Benefit obtained from new equipment $ 80,000.00
Period of Operation 4.00
Additional Benefit in 4 years $ 320,000.00
The existing equipment shall be replaced because by purchasing new equipment, $60,000 in cost
savings are obtained and old equipment can be leased out, thus resulting in additional revenue of
$20,000. Therefore, replacement of old equipment with new equipment will result in yearly
enefit of $80,000.
3
SOLUTION 1C:
Relevant cost is the cost which is...
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