Purchase Solution

Liquid Chemical Co Case Study: Favorable Actions; Advantages

Not what you're looking for?

Ask Custom Question

Attached is the case study.

Questions:

What are the advantages of one alternative over the other?

Which action would you favor?

Attachments
Purchase this Solution

Solution Summary

In a 403 word solution, the response provides excellent data for the decision process. Calculations are shown as required.

Solution Preview

What are the advantages of one alternative over the other?

The advantage of subcontracting is
There is a direct saving of 378,700 - 325,000 = $53,700
The extra warehouse space need not be rented and that would bring savings of $17,000 rent.
The advantages of not subcontracting are.
Savings on machinery 240,000/8 = 30,000 per year, usage for 4 years.
So, 120,000 - salvage money 40,000 = $80,000 loss on machinery averted.

Savings on special chemical:
200,000 - 40,000(used) = 160,000: 20% loss on sales that is $32,000 loss on sales and $32,000 opportunity cost.

Use of general administrative overheads. ...

Purchase this Solution


Free BrainMass Quizzes
Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Introduction to Finance

This quiz test introductory finance topics.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.