Two-Stage ABC for Manufacturing Columbus Foundry, a large manufacturer of heavy equipment components, has determined the following activity cost pools and cost driver levels for the year: Activity cost pool Activity cost Activity cost driver
Machine setup $600,000 12,000 setup hours
Material handling 120,000 2,000 tons of materials
Machine operation 500,000 10,000 machine hours

The following data are for the production of single batches of two products, C23 Cams and U2 Shafts:

C23 Cams U2 Shafts
Units produced 500 400
Machine hours 2 5
Direct labor hours 300 500
Direct labor cost $5,000 $10,000
Direct materials cost $30,000 $20,000
Tons of materials 12.5 8
Setup hours 5 7

Required:
Determine the unit costs of C23 Cams and U2 Shafts using ABC.

Burke enterprises is considering a machine costing $30 billion that will result in initial after-tax cash savings of $3.7 billion at the end of the first year, and these savings will grow at a rate of 2 percent per year for 11 years. after 11 years, the company can sell the parts for $5 billion. burke has a target debt/equity ratio of 1.2, a beta of 1.79. you estimate that the return on the market is 7.5% and t-bills are currently yielding 2.5%. burke has two issuances of bonds outstanding. the first has 200,000 bonds trading at 98% of par, with coupons of 5%, face of $1000, and maturity of 5 years. the second has 500,000 bonds trading at par, with coupons of 7.5%, face of $1000, and maturity of 12 years. kate, the ceo, usually applies an adjustment factor to the discount rate of +2 for such highly innovative projects. should the company take on the project?

Suppose the production function in an economy is y = k0.5l0.5, where k is the amount of capital and l is the amount of labor. the economy begins with 64 units of capital and 16 units of labor. use a calculator and equations in the chapter to find a numerical answer to each of the following questions. what are the wage and the rental price of capital? the wage is equal to unit(s) of output and the rental price of capital is equal to unit(s) of output.

Assume that a local bank sells two services, checking accounts and atm card services. the bank’s only two customers are mr. donethat and ms. beenthere. mr. donethat is willing to pay $8 a month for the bank to service his checking account and $2 a month for unlimited use of his atm card. ms. beenthere is willing to pay only $5 for a checking account, but is willing to pay $9 for unlimited use of her atm card. assume that the bank can provide each of these services at zero marginal cost. refer to scenario 17-5. if the bank is unable to use tying, what is the profit-maximizing price to charge for a checking account