BMAL530 Assignment: Homework 5 FALL 2014

1.
award:
2.45 out of
2.72 points

A jeans
maker is designing a new line of jeans called the Slims. The jeans will sell
for $330 per pair and cost $260.70 per pair in variable costs to make. (Round your answers to 2 decimal places.)

2.
award:
2.72 out of
2.72 points

Blanchard
Company manufactures a single product that sells for $104 per unit and whose
total variable costs are $78 per unit. The company’s annual fixed costs are
$369,200.

(1)

Prepare
a contribution margin income statement for Blanchard Company at the
break-even point.

Assume the company’s fixed costs increase by $127,000. What amount of
sales (in dollars) is needed to break even?

3

2.72 out of
2.72 points

Blanchard Company manufactures a single product
that sells for $310 per unit and whose total variable costs are $248 per
unit. The company targets an annual after-tax income of $1,240,000. The
company is subject to a 20% income tax rate. Assume that fixed costs remain
at $992,000.

4
4.
award:
2.72 out of
2.72 points

Blanchard
Company manufactures a single product that sells for $110 per unit and whose
total variable costs are $88 per unit. The company’s annual fixed costs are
$620,000. The sales manager predicts that annual sales of the company’s
product will soon reach 39,000 units and its price will increase to $190 per
unit. According to the production manager, the variable costs are expected to
increase to $130 per unit but fixed costs will remain $620,000. The income
tax rate is 20%. What amounts of pretax and after-tax income can the company
expect to earn from these predicted changes?

5

5.
award:
2.72 out of
2.72 points

Bill
Thompson expects to invest $18,000 at 12% and, at the end of a certain
period, receive $87,968. How many years will it be before Thompson receives
the payment? (Use table B.2.) (.mhhe.com/connect/0077429923/Images/tableb.1.JPG”>PV of $1, .mhhe.com/connect/0077429923/Images/tableb.2.JPG”>FV of $1, .mhhe.com/connect/0077429923/Images/tableb.3.jpg”>PVA of $1,
and .mhhe.com/connect/0077429923/Images/tableb.4.JPG”>FVA of $1) (Use appropriate factor(s) from the tables provided.)

6.
award:
2.72 out of
2.72 points

Ed
Summers expects to invest $20,000 for 9 years, after which he wants to
receive $33,790.00. What rate of interest must Summers earn? (Use table
B.2.) (.mhhe.com/connect/0077429923/Images/tableb.1.JPG”>PV of $1, .mhhe.com/connect/0077429923/Images/tableb.2.JPG”>FV of $1, .mhhe.com/connect/0077429923/Images/tableb.3.jpg”>PVA of $1,
and .mhhe.com/connect/0077429923/Images/tableb.4.JPG”>FVA of $1) (Use appropriate factor(s) from the tables provided.)

7.
award:
2.72 out of
2.72 points

Sam
Weber finances a new automobile by paying $5,600 cash and agreeing to make 30
monthly payments of $400 each, the first payment to be made one month after
the purchase. The loan bears interest at an annual rate of 12%. What is the
cost of the automobile? (.mhhe.com/connect/0077429923/Images/tableb.1.JPG”>PV of $1, .mhhe.com/connect/0077429923/Images/tableb.2.JPG”>FV of $1, .mhhe.com/connect/0077429923/Images/tableb.3.jpg”>PVA of $1,
and .mhhe.com/connect/0077429923/Images/tableb.4.JPG”>FVA of $1) (Use appropriate factor(s) from the tables provided. Round your final answers to 2 decimal places.)

8.
award:
2.72 out of
2.72 points

Spiller
Corp. plans to issue 8%, 7-year, $460,000 par value bonds payable that pay
interest semiannually on June 30 and December 31. The bonds are dated
December 31, 2013, and are issued on that date. (.mhhe.com/connect/0077429923/Images/tableb.1.JPG”>PV of $1, .mhhe.com/connect/0077429923/Images/tableb.2.JPG”>FV of $1, .mhhe.com/connect/0077429923/Images/tableb.3.jpg”>PVA of $1,
and .mhhe.com/connect/0077429923/Images/tableb.4.JPG”>FVA of $1) (Use appropriate factor(s) from the tables
provided. Round your answers to nearest whole dollar.)

If the
market rate of interest for the bonds is 6% on the date of issue, what will
be the total cash proceeds from the bond issue?

9.
award:
2.72 out of
2.72 points

McAdams
Company expects to earn 12% per year on an investment that will pay $599,773
six years from now. (.mhhe.com/connect/0077429923/Images/tableb.1.JPG”>PV of $1, .mhhe.com/connect/0077429923/Images/tableb.2.JPG”>FV of $1, .mhhe.com/connect/0077429923/Images/tableb.3.jpg”>PVA of $1,
and .mhhe.com/connect/0077429923/Images/tableb.4.JPG”>FVA of $1) (Use appropriate factor(s) from the tables provided. Round
your answers to nearest whole dollar.)

Compute
the present value of this investment.

10.
award:
2.72 out of
2.72 points

On
January 1, 2013, a company agrees to pay $20,000 in ten years. If the annual
interest rate is 8%, determine how much cash the company can borrow with this
agreement. (.mhhe.com/connect/0077429923/Images/tableb.1.JPG”>PV of $1, .mhhe.com/connect/0077429923/Images/tableb.2.JPG”>FV of $1, .mhhe.com/connect/0077429923/Images/tableb.3.jpg”>PVA of $1,
and.mhhe.com/connect/0077429923/Images/tableb.4.JPG”>FVA of $1) (Use appropriate factor(s) from the tables provided. Round
your answers to nearest whole dollar.)

[The following information applies to
the questions displayed below.]

Xcite
Equipment Co. manufactures and markets a number of rope products. Management
is considering the future of Product XT, a special rope for hang gliding,
that has not been as profitable as planned. Since Product XT is manufactured
and marketed independently of the other products, its total costs can be
precisely measured. Next year’s plans call for a $300 selling price per 100
yards of XT rope. Its fixed costs for the year are expected to be $210,000,
up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs
are $240 per 100 yards of XT rope.

11.
award:
2.64 out of
2.80 points

1.

Estimate
Product XT’s break-even point in terms of sales units. (1 unit = 100 yards.) (Do not round intermediate calculations.)