Grand Fender is a competitor of Pro Fender from Exercise E23-19. Grand Fender also uses a standard cost system and provides the following information:Static budget variable overhead$ 5,630Static budget fixed overhead$ 22,520Static budget direct labor hours563 hoursStatic budget number of units21,000 unitsStandard direct labor hours0.026 hours per fenderGrand Fender allocates manufacturing overhead to production based on standard direct labor hours. Grand Fender reported the following actual results for 2016: actual number of fenders produced, 20,000; actual variable overhead, $5,200; actual fixed overhead, $24,000; actual direct labor hours, 480.Requirements1. Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance.2. Explain why the variances are favorable or unfavorable.

□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□per job include 10 software packages at a cost of $900 per package. Standard direct labor □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□during March 2018.Actual direct materials costs for March included 90 software packages at a total cost of $81,450. Actual direct labor costs included 110 hours per job at an average rate of □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□Requirements1. Calculate direct materials cost and efficiency variances.2. Calculate direct labor cost and efficiency variances.3. Prepare journal entries to record the use of both materials and labor for March for the company.

 

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Grand Adventure Properties offers a 8 percent coupon bond with annual payments. The yield to maturity is 6.85 percent and the maturity date is 7 years from today. What is the market price of this bond if the face value is $1,000?

Grand Adventure Properties offers a 8 percent coupon bond with annual payments. The yield to maturity is 6.85 percent and the maturity date is7 years from today. What is the market price of this…

 

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7. Grammar and Mechanics – Commas

Choose the correct comma placement in the following sentences.

I went home after workand  my coworker sent me an e-mail about the project.

Since I just got my pilot’slicense,  I was scared during my solo flight.

I want to go to the evening meeting, but  it is scheduled for the same time as the main speaker’s presentation.

I am an investor in the companyand  you need to address my concerns.

The team met for the meeting on Tuesdayand  reconvened on Wednesday.

Which is the correctly punctuated sentence?

 

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Graph and explain the relationships you would expect to find between (a) the number of inches of rainfall per month and the sale of umbrellas, (b)the price of bottled water and the number ofbottles sold per year, and (c) the popularity of an entertainer and the priceof her concert tickets.

 

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Grant Thomas, the financial advisor to Innovative Manufacturing is evaluating the following new investment in a manufacturing project:- 

The project has a useful life of 10 years.

Land costs $5m and is estimated to have a resale value of $7m at the completion of the project.

Buildings cost $4m, with allowable depreciation of 5% pa straight-line and a salvage value of $0.8m.

Equipment costs $3m, with allowable depreciation of 20% pa straight-line and a salvage value of $0.4m. An investment allowance of 20% of the equipment cost is available.

Revenues are expected to be $5m in year one and rise at 10% pa.

Cash expenses are estimated at $2m in year one and rise at 5% pa.

The new product will be charged $300,000 of allocated head office administration costs each year even though head office will not actually incur any extra costs to manage the project.  

An amount of $200,000 has been spent on a feasibility study for the new project.  

The project is to be partially financed with a loan of $6m to be repaid annually with equal instalments at a rate of 5% pa over 10 years.

Except for initial outlays, assume cash flows occur at the end of each year.

The tax rate is 30% and is payable in the year in which profit is earned.  

The after tax required return for the project is 10% pa.

Required

(a)  Calculate the NPV.  Is the project acceptable? Why or why not?

(b)  Conduct a sensitivity analysis showing how sensitive the project is to revenues, cash expenses and to the cost of capital. Explain your results.

 

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