Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that it will receive a flat fee of $70,000 and an additional $40,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 30% chance that Bran will achieve the cost-savings target. Required:
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Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that it will receive a flat fee of $70,000 and an additional $40,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 30% chance that Bran will achieve the cost-savings target.
Required:
- Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transaction price.
- Assuming Thomas uses the most likely value as its estimate of variable consideration, calculate the transaction price.
- Assume Thomas uses the expected value as its estimate of variable consideration, but is very uncertain of that estimate due to a lack of experience with similar consulting arrangements. Calculate the transaction price.
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- Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas's contract specifies that it will receive a flat fee of $60,000 and an additional $30,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 25% chance that Bran will achieve the cost-savings target. Required: 1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transaction price. 2. Assuming Thomas uses the most likely value as its estimate of variable consideration, calculate the transaction price. 3. Assume Thomas uses the expected value as its estimate of variable consideration, but is very uncertain of that estimate due to a lack of experience with similar consulting arrangements. Calculate the transaction price. 1. Using expected value 2. Using most likely value 3. Using expected value but uncertain Transaction Pricehomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that it will receive a flat fee of $50,000 and an additional $20,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 20% chance that Bran will achieve the cost-savings target. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transaction price. Assume Thomas uses the expected value as its estimate of variable consideration, but is very uncertain of that estimate due to a lack of experience with similar consulting arrangements. Calculate the transaction price.Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives.Thomas’s contract specifies that it will receive a flat fee of $50,000 and an additional $20,000 if Bran reaches aprespecified target amount of cost savings. Thomas estimates that there is a 20% chance that Bran will achieve thecost-savings target.Required:1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transactionprice.2. Assuming Thomas uses the most likely value as its estimate of variable consideration, calculate the transaction price.3. Assume Thomas uses the expected value as its estimate of variable consideration, but is very uncertain of thatestimate due to a lack of experience with similar consulting arrangements. Calculate the transaction price.
- ok t M ences Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas's contract specifies that it will receive a flat fee of $68,000 and an additional $38,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 20% chance that Bran will achieve the cost-savings target. Required: 1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transaction price. 2. Assuming Thomas uses the most likely value as its estimate of variable consideration, calculate the transaction price. 3. Assume Thomas uses the expected value as its estimate of variable consideration, but is very uncertain of that estimate due to a lack of experience with similar consulting arrangements. Calculate the transaction price. 1. Using expected value 2. Using most likely value 3. Using expected value but uncertain Transaction PriceSkip Consulting helped Schmidt Roofers put various cost saving techniques into place. Thecontract specifies that Skip will receive a flat fee of $70,000 and an additional $19,000 if Schmidtattains a target amount of cost savings. Skip estimates a 20% chance that Schmidt will reach thetarget for cost savings. Assuming that Skip uses the expected-value approach, what is thetransaction price for this product?a. $19,000b. $70,000c. $73,800d. $89,000Two alternative machines will produce the same product, but one is capable of higher quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL. depreciation, an income-tax rate of 26%, and an after-tax MARR of 11%. Capital investment Life Calculate the AW value for the Machine A AWA(11%) 5 (Round to the nearest dollar) Terminal BV (and MV) Annual receipts Annual expenses Machine A $18,000 11 years $4,000 $157,000 $129,000 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11% per year. Machine $29,000 6 years 50 $178,000 $164,000
- Markland Manufacturing manufactures desk lamps intends to increase capacity by obtaining new equipment. Two vendors have presented proposals. The purchase cost for proposal A is $30,000, and for proposal B, $80,000. Each proposal will produce lamps of the same quality. Proposal A is expected to produce lamps at $15.00/lamp, while proposal B is significantly more efficient and will produce them at $10.00/lamp. The revenue generated by the sale of each lamp is $20.00/unit. A. What is the point of indifference?B. The manufacturer expects to sell 12,000 lamps and has informed the vendors that it has chosen proposal B. The vendor of proposal A has offered to re-negotiate the purchase price of its proposal in order to win the contract. What purchase price will cause the manufacturerto reconsider its decision?You are asked to recommend whether a firm should make or purchase product A. The following are data conceming the two options For the purchase option, the firm can buy product A at $19 per unit. For the make option, the firm can produce product A based on the following cost estimation data. The firm has to pay a weekly rental payment of $19,000 for the production facility With the use of this facility, the firm also has to hire five operators to help make product A Each operator works eight hours per day, five days per week at the rate of $10 per hour. In other words, the rental and labor expenses are fixed costs. The material cost for the make option is $14 per unit of product A a. Find a weekly amount of product A that provides the breakeven point for the firm. The breakeven point in this problem indicates the firm's indifference between purchasing or making product A. b. If the firm estimates the sale of product A to be 5,600 units per week, should it make or purchase product A? a.…Assume that a company is considering purchasing a machine for $50,500 that will have a five-year useful life and no salvage value. The machine will lower operating costs by $17,000 per year. The company's required rate of return is 18%. The profitability index for this investment is closest to: Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice O 0.95. 1.01. 1.05. 1.11.
- Assume that a company is considering purchasing a machine for $50,500 that will have a five-year useful life and no salvage value. The machine will lower operating costs by $17,000 per year. The company's required rate of return is 18%. The profitability index for this investment is closest to: Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice C O 0.95. 1.01. 1.05. 1.11.Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. The company has determined the following: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Machine A could be purchased for $27,500. It will last 10 years with annual maintenance costs of $1,000 per year. After 10 years the machine can be sold for $2,750.Machine B could be purchased for $25,000. It also will last 10 years and will require maintenance costs of $4,000 in year three, $5,000 in year six, and $6,000 in year eight. After 10 years, the machine will have no salvage value.Required:Assume an interest rate of 8% properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Ignore income tax considerations.Calculate the present value of Machine A & Machine B. Which machine Esquire…Acadia Logistics anticipates that it will need more distribu-tion center space to accommodate what it believes will bea significant increase in demand for its final-mile services.Acadia could either lease public warehouse space to coverall levels of demand or construct its own distribution centerto meet a specified level of demand, and then use publicwarehousing to cover the rest. The yearly cost of buildingand operating its own facility, including the amortized costof construction, is $12.00 per square foot. The yearly cost ofleasing public warehouse space is $20.00 per square foot. Theexpected demand requirements follow: a. Calculate the expected value of leasing public warehousespace as required by demand.b. Calculate the expected value of building a 200,000-square-foot distribution center and leasing public warehousespace as required if demand exceeds the need for 200,000square feet of space.c. Calculate the expected value of building a 300,000-square-foot distribution center and…