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Cost Analysis

Jax$-$O$-$lantern Company, Inc.$$ produces two products, tower lights and tabletop lights. Use the data in the table below to answer the questions.

Cost of finished products Tower Light Tabletop Light

Direct Material $$50$ $$28$ $$22$

Direct Labor $$40$ $$22$ $$18$

Overhead $$96$ Split based on direct L abor Cost

Fixed Costs $100000100000$

Retail Price $$149$ $$119$

Requirements $($Be sure to show all work$)$

Consider each of the following questions separately by using the information in the table for each question.

$1.$ Calculate the breakeven point in units for each product.

$2.$ The Company reduces its sales price from $$149$ per pair to $$129$ per unit. Calculate the new breakeven point in units.

$3.$ The Company finds a new supplier for its material. Variable costs will decrease by $$10$ per unit. Calculate the new breakeven point in units.

$4.$ The Company plans to advertise on social media. The advertising campaign will increase total fixed costs by $$4,000$ per month. Calculate the new breakeven point in units.

Question $2.$ Non$-$Financial Performance Many city and county governments are discovering that you can control only what you measure. As a result, many municipal governments are introducing non$-$financial performance measures to help improve municipal services. Use the Google search engine to perform a search for $$municipal government performance measurement.$$ Google will provide a list of Internet sites that outline various city efforts in using nonfinancial performance measures.

$1.$ Select your current city to use in your answer to this question. Report on the types of measures used by your selected city. Explain how one of these measures is expected to improve the quality of life for its residents.

Question $3.$ Personal Investment Analysis Find the cost of a bachelor's degree at the university of your choice; assume additional costs of $$16,000$ for an additional fifth year of education to get a master's degree. Assume that all tuition is paid at the beginning of the year. A student considering this investment must evaluate the present value of cash flows from possessing a graduate degree versus holding only an undergraduate degree. Assume that the average student with an undergraduate degree is expected to earn an annual salary of $$55,000$ per year $($assumed to be paid at the end of the year$)$ for $10$ years. Assume that the average student with a graduate master's degree is expected to earn an annual salary of $$76,000$ per year $($assumed to be paid at the end of the year$)$ for nine years after graduation. Assume a minimum rate of return of $10\%.$

$1.$ Determine the net present value of cash flows for the cost of education based on a $10\%$ rate from the undergraduate degree.

$2.$ Determine the net present value of cash flows from an undergraduate degree. Use the present value table provided in Chapter $26.$

$3.$ Determine the net present value of cash flows for the cost of education based on a $10\%$ rate from the master$$s degree $($include the cost for the fifth year$).$

$4.$ Determine the net present value of cash flows from a master's degree, assuming that no salary is earned during the graduate year of schooling.

$5.$ Calculate and compare the net advantage or disadvantage of pursuing a graduate degree under these assumptions.

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