2. A food supply company ships food to customers, such as restaurants and school cafeterias, in a nearby city. It needs to decide which shipping alternative is the most cost effective. Note that this can be structured as a breakeven problem to compare the three options. The total fixed costs for choosing the carrier type and variable cost per shipment for each option are as follows: Carrier Type Fixed Costs Variable Costs Common $0 $750 Contract $5,000 $300 Lease $21,000 $50 a. Compare the common and contract options. At what number of shipments would the two options be equally profitable, or when would they breakeven? NOTE: only full shipments can be sent, so for the sake of simplicity round down in the event of a partial shipment. For example, 95.3 shipments would simply be 95 in this case. b. If 40 shipments were to be sent, then which carrier type would you prefer to minimize costs? c. If 75 shipments were to be sent, then which carrier type would you prefer to minimize costs?

Shrieves casting company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by sidney johnson, a recently graduated mba. the production line would be set up in unused space in the main plant. the machinery’s invoice price would be approximately $200,000, another $10,000 in shipping charges would be required, and it would cost an additional $30,000 to install the equipment. the machinery has an economic life of 4 years, and shrieves has obtained a special tax ruling that places the equipment in the macrs 3-year class. the machinery is expected to have a salvage value of $25,000 after 4 years of use. the new line would generate incremental sales of 1,250 units per year for 4 years at an incremental cost of $100 per unit in the first year, excluding depreciation. each unit can be sold for $200 in the first year. the sales price and cost are both expected to increase by 3% per year due to inflation. further, to handle the new line, the firm’s net working capital would have to increase by an amount equal to 12% of sales revenues. the firm’s tax rate is 40%, and its overall weighted average cost of capital, which is the risk-adjusted cost of capital for an average project (r), is 10%. define “incremental cash flow.” (1) should you subtract interest expense or dividends when calculating project cash flow?

The cost of the beginning work in process inventory was comprised of $3,000 of direct materials, $10,000 of direct labor, and $10,000 of factory overhead. costs incurred during the period were comprised of $15,000 of direct materials costs, and $100,000 of conversion costs. the equivalent units of production (eup) for the period were 9,000 for direct materials and 6,000 for conversion. the costs per eup were:

Randall's, inc. has 20,000 shares of stock outstanding with a par value of $1.00 per share. the market value is $12 per share. the balance sheet shows $42,000 in the capital in excess of par account, $20,000 in the common stock account, and $50,500 in the retained earnings account. the firm just announced a 5 percent (small) stock dividend. what will the balance in the retained earnings account be after the dividend?