亨格瑞管理会计英文第15版-答案-10-12章.pdf

Copyright 2011 Pearson Education 1 CHAPTER 11 Capital Budgeting 11 A1 15 25 min Answers are printed in the text at the end of the assignment material 11 29 10 15 min 1 The present value is 480 000 and the annual payments are an annuity requiring use of Table 2 a 480 000 annual payment 11 2578 annual payment 480 000 11 2578 42 637 b 480 000 annual payment 9 4269 annual payment 480 000 9 4269 50 918 c 480 000 annual payment 8 0552 annual payment 480 000 8 0552 59 589 2 a 480 000 annual payment 8 5595 annual payment 480 000 8 5595 56 078 b 480 000 annual payment 7 6061 annual payment 480 000 7 6061 63 107 c 480 000 annual payment 6 8109 annual payment 480 000 6 8109 70 475 3 a Total payments 30 50 918 1 527 540 Total interest paid 1 527 540 480 000 1 047 540 b Total payments 15 63 107 946 605 Total interest paid 946 605 480 000 466 605 11 36 10 min Buy The net present value is positive Initial outlay 21 000 Present value of cash operating savings from 12 year 12 column of Table 2 6 1944 5 000 30 972 Net present value 9 972 The trade in allowance really consists of a 5 000 adjustment of the selling price and a bona fide 10 000 cash allowance for the old equipment The relevant amount is the incremental cash outlay 21 000 The book value is irrelevant 11 39 10 15 min Copyright 2011 Pearson Education 2 1 NPV 10 10 000 3 7908 37 908 36 048 1 860 NPV 12 10 000 3 6048 36 048 36 048 0 NPV 14 10 000 3 4331 34 331 36 048 1 717 2 The IRR is the interest rate at which NPV 0 therefore from requirement 1 we know that IRR 12 3 The NPV at the company s cost of capital 10 is positive so the project should be accepted 4 The IRR 12 is greater than the company s cost of capital 10 so the project should be accepted Note that the IRR and NPV models give the same decision 11 46 10 15 min Annual addition to profit 40 25 000 10 000 1 Payback period is 36 000 10 000 3 6 years It is not a good measure of profitability because it ignores returns beyond the payback period and it does not account for the time value of money 2 NPV 5 114 Accept the proposal because NPV is positive Computation NPV 10 000 4 1114 36 000 41 114 36 000 5 114 3 ARR Increase in average cash flow Increase in depreciation Initial investment 10 000 6 000 36 000 11 1 11 51 30 35 min 1 Annual Operating Cash Flows Xerox Cannon Difference Salaries 49 920 a 41 600 b 8 320 Overtime 1 728 c 1 728 Repairs and maintenance 1 800 1 050 750 Toner supplies etc 3 600 3 300 300 Total annual cash outflows 57 048 45 950 11 098 a 8 40 hrs 52 weeks 3 employees 320 52 3 49 920 b 10 40 hrs 52 weeks 2 employees 400 52 2 41 600 c 12 4 hrs 12 months 3 machines 48 12 3 1 728 Initial Cash Flows Xerox Cannon Difference Purchase of Cannon machines 50 000 50 000 Copyright 2011 Pearson Education 3 Sale of Xerox machines 3 000 3 000 Training and remodeling 4 000 4 000 Total 51 000 51 000 Copyright 2011 Pearson Education 461 EXHIBIT 11 50 All numbers are expressed in Mexican pesos 2 18 Total Sketch of Relevant Cash Flows PV Present in thousands Factor Value 0 1 2 3 4 5 Cash operating savings 8475 83 902 99 000 7182 78 212 108 900 6086 72 904 119 790 5158 67 966 131 769 4371 63 356 144 946 Total 366 340 Income tax savings from depreciation not changed by inflation see 1 3 1272 105 074 33 600 33 600 33 600 33 600 33 600 Total 471 414 Required outlay at time zero 1 0000 420 000 420 000 Net present value 51 414 Amounts are computed by multiplying 150 000 6 90 000 by 1 10 1 10 2 1 10 3 etc Copyright 2011 Pearson Education 462 PV Present of 1 00 Value of Discounted Cash Flows Annual Cash Flows at 12 0 1 2 3 4 5 TOTAL PROJECT APPROACH Cannon Init cash outflow 1 0000 51 000 Oper cash flows 3 6048 165 641 45 950 45 950 45 950 45 950 45 950 Total 216 641 Xerox Oper cash flows 3 6048 205 647 57 048 57 048 57 048 57 048 57 048 Difference in favor of retaining Xerox 10 994 INCREMENTAL APPROACH Initial investment 1 0000 51 000 Annual operating cash savings 3 6048 40 006 11 098 11 098 11 098 11 098 11 098 Net present value of purchase 10 994 2 The Xerox machines should not be replaced by the Cannon equipment Net savings Present value of expenditures to retain Xerox machines less Present value of expenditures to convert to Cannon machines 205 647 216 641 10 994 3 a How flexible is the new machinery Will it be useful only for the presently intended functions or can it be easily adapted for other tasks that may arise over the next 5 years b What psychological effects will it have on various interested parties Copyright 2011 Pearson Education 463 11 71 60 90 min This is a complex problem because it requires comparing three alternatives It reviews Chapter 6 as well as covering several of the topics of Chapter 11 The following answer uses the total project approach The total net future cash outflows are shown for each alternative 1 Alternative A Continue to manufacture the parts with the current tools Annual cash outlays Variable cost 92 8 000 736 000 Fixed cost 1 3 45 8 000 6 72 000 Tax savings 4 736 000 72 000 323 200 After tax annual cost 484 800 Present value 3 6048 484 800 1 747 607 PV of remaining tax savings on MACRS 11 52 2 000 000 4 8929 82 290 5 76 2 000 000 4 7972 36 735 Total present value of costs Alternative A 1 628 582 Alternative B Purchase from outside supplier Annual cash outlays Purchase cost 110 8 000 880 000 Tax savings 880 000 4 352 000 After tax annual cost 528 000 Copyright 2011 Pearson Education 464 Present value 528 000 3 6048 1 903 334 Sale of old equipment Sales price 400 000 Book value 11 52 5 76 2 000 000 345 600 Gain 54 400 Taxes 40 21 760 Total after tax effect 400 000 21 760 378 240 Total present value of costs Alternative B 1 525 094 Copyright 2011 Pearson Education 465 Alternative C Purchase new tools Investment 1 800 000 Annual cash outlays Variable cost 73 8 000 584 000 Fixed cost same as A 72 000 Tax savings 4 584 000 72 000 262 400 After tax annual cost 393 600 Present value 393 600 3 6048 1 418 849 Tax savings on new equipment 579 217 Effect of disposal of new equipment Sales price 500 000 Book value 0 Gain 500 000 Taxes 40 200 000 Total after tax effect 300 000 Present value 300 000 5674 170 220 Effect of disposal of old equipment see Alternative B 378 240 Total present value of costs Alternative C 2 091 172 Using the MACRS schedule for tax depreciation the depreciation rate for each year of a 3 year asset s life is shown in Exhibit 11 6 Depreciation Tax PV Present Year Rate Savings Factor Value 1 33 33 3333 1 800 000 40 239 976 8929 214 275 2 44 45 4445 1 800 000 40 320 040 7972 255 136 3 14 81 1481 1 800 000 40 106 632 7118 75 901 4 7 41 0741 1 800 000 40 53 352 6355 33 905 Total present value of tax savings 579 217 Using Exhibit 11 7 we get 8044 1 800 000 4 579 168 which differs from 579 217 by a 49 rounding error The alternative with the lowest present value of cost is Alternative B purchasing from the outside supplier Copyright 2011 Pearson Education 466 2 Among the major factors are 1 the range of expected volume both large increases and decreases in volume make the purchase of the parts relatively less desirable 2 the reliability of the outside supplier 3 possible changes in material labor and overhead prices 4 the possibility that the outside supplier can raise prices before the end of five years 5 obsolescence of the products and equipment and 6 alternate uses of available capacity alternative uses make Alternative B relatively more desirable Copyright 2011 Pearson Education 467 CHAPTER 12 Cost Allocation 12 30 10 15 min 1 Rate 2 500 05 100 000 100 000 075 per copy Cost allocated to City Planning in August 075 42 000 3 150 2 Fixed cost pool allocated as a lump sum depending on predicted usage To City Planning 36 000 100 000 2 500 900 per month Variable cost pool allocated on the basis of actual usage 05 number of copies Cost allocated to City Planning in August 900 05 42 000 3 000 3 The second method the one that allocated fixed and variable cost pools separately is preferable It better recognizes the causes of the costs The fixed cost depends on the size of the photocopy machine which is based on predicted usage and is independent of actual usage Variable costs in contrast are caused by actual usage Exhibit 12 34 Customer Type 1 Customer Type 2 Customer Type 3 Sales Gross price profit per margin Gross Gross Gross Product unit per unit Units Revenue profit Units Revenue profit Units Revenue profit A 11 031 4 14 200 2 206 828 2 200 24 266 9 108 500 5 515 2 070 B 20 47 4 09 100 2 047 409 1 200 24 564 4 908 3 000 61 410 12 270 C 51 38 10 28 50 2 569 514 400 20 552 4 112 5 000 256 900 51 400 Copyright 2011 Pearson Education 468 D 90 00 39 38 400 36 000 15 752 800 72 000 31 504 400 36 000 15 752 Total 750 42 822 17 503 4 600 141 382 49 632 8 900 359 825 81 492 Cost to serve 7 368 45 193 87 439 Operating income 10 135 4 439 5 947 Customer gross margin percentage 40 9 35 1 22 6 Cost to serve percentage 17 2 32 0 24 3 Customer operating income percentage 23 7 3 1 1 7 1 32 000 2 900 units etc The rounded numbers from the first two columns are used in subsequent calculations Copyright 2011 Pearson Education 469 5 The chart below shows customer profitability for the three customer types and suggested strategies for profit improvement Grow business with this customer type by focused sales efforts and quantity discounts Work with customers to lower the cost to serve Seek internal process improvements to lower those elements of the cost to serve controllable by the company Work with customers to change their ordering patterns focusing more on the more profitable products Also these customers may be able to lower the cost to serve Seek internal process improvements to lower those elements of the cost to serve controllable by the company Copyright 2011 Pearson Education 470 12 35 15 20 min 1 Allocation of Gallons Weighting Joint Costs Solvent A 9 000 9 15 300 000 180 000 Solvent B 6 000 6 15 300 000 120 000 15 000 300 000 2 Relative Sales Allocation of Value at Split off Weighting Joint Costs Solvent A 270 000 27 54 300 000 150 000 Solvent B 270 000 27 54 300 000 150 000 540 000 300 000 30 9 000 and 45 6 000 12 42 25 30 min There a several ways to organize an analysis that provides product costs We like to focus first on determining total activity cost pools and activity cost per driver unit Then an analysis similar to the one shown in Exhibit 12 8 can be used Schedule a Activity center cost pools Resources Supporting the Allocated Setup Maintenance Activity Center Allocation Calculation Cost Assembly supervisors 90 000 2 1 800 Assembly machines 247 000 400 1 900 52 000 Facilities management 95 000 400 1 900 20 000 Power 54 000 10 90 6 000 Total assigned cost 79 800 Cost per driver unit setup 79 800 40 1 995 Resources Supporting the Allocated Setup Maintenance Activity Center Allocation Calculation Cost Assembly supervisors 90 000 98 88 200 Assembly machines 247 000 1 500 1 900 195 000 Facilities management 95 000 1 500 1 900 75 000 Power 54 000 80 90 48 000 Total assigned cost 406 200 Cost per driver unit machine hour 406 200 1 500 270 80 Copyright 2011 Pearson Education 471 Exhibit 12 42 Contribution to cover other value chain costs by product Standard Deluxe Custom Cost per Driver unit Driver Driver Driver Activity Resource Schedule a Units Cost Units Cost Units Cost Setup Maintenance 1 995 20 39 900 12 23 940 8 15 960 Assembly 270 80 1 000 270 800 400 108 320 100 27 080 Parts 1 003 800 115 080 15 980 Direct labor 298 000 72 000 68 000 Total 1 612 500 319 340 127 020 Units 100 000 10 000 1 000 Cost per display 16 125 31 934 127 02 Selling price 20 000 50 000 250 00 Unit gross profit 3 875 18 066 122 98 Total gross profit 387 500 180 660 122 980 The total contribution of these products is 387 500 180 660 122 980 691 140 Copyright 2011 Pearson Education 472 12 43 25 30 min See solution to problem 12 42 12 55 100 200 min 1 Exhibits 12 55A and 12 55B show the calculation of customer gross margin percentage and customer cost to serve percentage for the 4 customer types Exhibit 12 55C shows a plot of customer gross margin percentage versus customer cost to serve percentage for the 4 customer types 2 Suggested strategies for profit improvement for the 4 customer types follow Customer type 1 Mega stores These stores have the lowest cost to serve Profitability can be improved by focusing on a better product mix A quarter of the sales cases to these stores are from bulk and singles products both of which have a negative gross margin A shift in mix towards more regular and fragile product types would improve profitability Customer type 2 Local small stores These stores have a product mix that contains a substantial amount 32 of the negative gross margin products The same change in sales focus that applies to mega stores can be applied to local small stores But unlike mega stores small stores are very costly to serve From Exhibit 12 55 B the largest single cost to serve local small stores is truck deliveries The average number of cases per order the same as per truck delivery is 6 000 000 80 000 75 Compare this to mega stores that average 7 680 000 32 000 240 cases per order delivery This is a significant factor causing the high cost to serve For example suppose that the average order size could be increased from 75 000 to 150 000 cases If the total annual cases sold is unchanged 6 000 000 a total of 40 orders a 50 reduction would be made An estimate of the cost savings and the impact on the cost to serve percentage can be made as follows Cost per Driver Unit Reduction in Driver Cost Savings Exhibit 12 55B Units of 50 000 Truck delivery 167 55 34 000 5 696 70 Order processing 27 49 40 000 1 099 60 Regular scheduling 5 83 36 000 209 88 Expedited scheduling 19 44 4 000 77 76 Total cost savings 000 7 083 94 Cost savings as a percent of revenue 24 9 New cost to serve as a percent of revenue 60 1 In addition to the above savings other activities would also be impacted by the reduction in orders such as customer service So while the total impact of Copyright 2011 Pearson Education 473 focusing on increasing order size can only be estimated it is reasonable to expect dramatic cost savings from the current 85 of revenue Other factors that should be investigated include the high level of corporate support and customer service Customer type 3 Local large stores Local large stores generate 68 400 136 230 50 of DSI s total revenue and with a net margin of 58 47 11 The key to local large store profitability is sales of a large percentage 80 of regular product The cost to serve percentage is 47 This could be reduced as for customer type 2 by increasing the order size from the current level of 14 400 000 120 000 120 cases per order But a dramatic improvement should not be expected In general local large stores are sustaining DSI s business and their loyalty should be cultivated Customer type 4 Specialty stores Specialty stores have a low gross margin of 22 coupled with a very large cost to serve percent of 106 Although these stores do not account for a significant portion of DSI s revenue the company should rationalize their business Several actions could be suggested One is to charge a premium for all high security products The vast majority of these products are sold to specialty stores with only marginal sales to mega and local small stores Another action is to adopt a customer loyalty program based on volume of sales The list price of 7 25 per case would apply to customers with sales volumes less than a specified level Most of DSI s customers would qualify for discounts similar to those currently existing so prices would not be significantly different For specialty stores prices would increase dramatically This may result in losing specialty store business so DSI needs to decide is this is a direction they wish to consider Copyright 2011 Pearson Education 474 Exhibit 12 55A Units and dollars are in thousands Customer Type ProductRegular Short Fragile Bulk High Security SinglesTotal Gross Profit Percentage Product mix percentage 60 5 5 20 5 5 100 Cases sold 4 608 384 384 1 536 384 384 7 680 Total Revenue 21 888 1 824 1 824 7 296 1 824 1 824 36 480 Gross Profit per Case 3 28 1 58 2 74 1 44 0 54 5 30 1 Total Gross Profit 15 114 607 1 052 2 212 207 2 035 12 733 35 Product mix percentage 50 5 5 30 8 2 100 Cases sold 3 000 300 300 1 800 480 120 6 000 Total Revenue 4 75 case 14 250 1 425 1 425 8 550 2 280 570 28 500 Gross Profit per Case 3 28 1 58 2 74 1 44 0 54 5 30 2 Total Gross Profit 9 840 474 822 2 592 259 636 8 167 29 Product mix percentage 80 0 10 10 0 0 100 Cases sold 11 520 1 440 1 440 14 400 Total Revenue 4 75 case 54 720 6 840 6 840 68 400 Gross Profit per Case 3 28 1 58 2 74 1 44 0 54 5 30 3 Total Gross Profit 37 786 3 946 2 074 39 658 58 Product mix percentage 10 20 0 0 70 0 100 Cases sold 60 120 420 600 Total Revenue 4 75 case 285 570 1 995 2 850 Gross Profit per Case 3 28 1 58 2 74 1 44 0 54 5 30 4 Total Gross Profit 197 190 227 613 22 Copyright 2011 Pe