Ac505 Project B

Clark Paints

Data:
be of new equipment $200,000
Expected life story of equipment in twelvemonths5 years
Disposal value in 5 years $40,000
Life production - number of cans $5,500,000
one-year production or leveraging needs $1,100,000
Number of workers unavoidable3
yearbook hours to be worked per employee2000 hours
Earnings per hour for employees $12.00
yearly health benefits per employee $2,500
early(a) annual benefits per employee-% of wages18%
comprise of raw materials per can $0.25
Other variable production court per can $0.05
Costs to purchase cans - per can $0.



45
Required rove of return12%
impose rate35%


Cost to produceMakingPurchasing
Annual cost to purchase cans $495,000
Annual cost of direct material:
Need of 1,100,000 cans per year $275,000
Annual variable production costs per can
Other variable production costs per can $55,000
Annual cost of direct labor for new employees:
Payroll for the three employees $72,000
Annual health benefits $7,500
Other annual benefits $12,960
hail wages and benefits $92,460
Total annual production costs $422,460 $495,000 $(72,540)



Annual silver redeeming(a) before Tax $72,540
Annual depreciation = (200000 - 40000) / 5 $32,000
Tax savings due to depreciation $11,200

Cash flows over the life of the project
Before TaxTax Effectafter Tax
ItemAmount Amount
Annual cash savings (make vs. buy) $72,540 0.65 $47,151
Tax savings due to depreciation...If you want to germinate a full essay, order it on our website: Ordercustompaper.com



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