Homework Help is Here – Start Your Trial Now!
Business
Accounting
Kleen Corporation, a privately owned and operated single-stream recycling facility, has annual contracts with several cities in the Tri-County Metropolitan Area. Kleen Corporation wants to add a new set of sensors to its existing machinery that will separate plastics and metals from paper and glass materials earlier in the separation process. Two versions of the sensor equipment are available from the Green Corporation. Model 400 has a first cost of $700,000, while Model 1000 costs $1 million. Both have an expected 10% salvage value after their respective useful lives of 6 and 3 years. Assume you work for Kleen Corporation as a project engineer. You have made first-cut estimates of the annual savings (with no annual increases for efficiency) and expenses (AOC with no annual decreases or increases) for both models. Required: a. Perform a ROR analysis using MARR = 5% per year to recommend one of the two models to your president. b. Whether there is any ranking inconsistency present with these two alternatives? If there is, then recommend one of the two models to your president. Model 400 1000 Year Savings, $1000 per year Expenses, $1000 per year Savings, $1000 per year Expenses, $1000 per year 1 180 -40 410 410 -60 -60 2 3 4 180 180 180 -40 -40 -40 410 -60 5 180 -40 6 180 -40

Kleen Corporation, a privately owned and operated single-stream recycling facility, has annual contracts with several cities in the Tri-County Metropolitan Area. Kleen Corporation wants to add a new set of sensors to its existing machinery that will separate plastics and metals from paper and glass materials earlier in the separation process. Two versions of the sensor equipment are available from the Green Corporation. Model 400 has a first cost of $700,000, while Model 1000 costs $1 million. Both have an expected 10% salvage value after their respective useful lives of 6 and 3 years. Assume you work for Kleen Corporation as a project engineer. You have made first-cut estimates of the annual savings (with no annual increases for efficiency) and expenses (AOC with no annual decreases or increases) for both models. Required: a. Perform a ROR analysis using MARR = 5% per year to recommend one of the two models to your president. b. Whether there is any ranking inconsistency present with these two alternatives? If there is, then recommend one of the two models to your president. Model 400 1000 Year Savings, $1000 per year Expenses, $1000 per year Savings, $1000 per year Expenses, $1000 per year 1 180 -40 410 410 -60 -60 2 3 4 180 180 180 -40 -40 -40 410 -60 5 180 -40 6 180 -40

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 13E
See similar textbooks
icon
Related questions
Question
Kleen Corporation, a privately owned and operated single-stream recycling facility, has annual contracts with several cities in the Tri-County Metropolitan Area, Kleen Corporation wants to add a new set of sensors to its existing machinery that will separate plastics and metals from paper and glass materials earlier in the separation process. Two versions of the sensor equipment are available from the Green Corporation. Model 400 has a first cost of $700,000, while Model 1000 costs $1 million. Both have an expected 10% salvage value after their respective useful lives of 6 and 3 years. Assume you work for Kleen Corporation as a project engineer. You have made first-cut estimates of the annual savings (with no annual increases for efficiency) and expenses (AOC with no annual decreases or increases) for both models. Required: a. Perform a ROR analysis using MARR = 5% per year to recommend one of the two models to your president. b. Whether there is any ranking inconsistency present with these two alternatives? If there is, then recommend one of the two models to your president. Model 400 1000 Year Savings, $1000 per year Expenses, $1000 per year Savings, $1000 per year Expenses, $1000 per year 1 180 -40 410 -60 2 3 180 180 -40 -40 410 410 -60 -60 4 180 -40 5 180 -40 6 180 -40 Navigation: 1. Use the Open Excel in New Tab button to launch this question. 2. When finished in Excel, use the Save and Return to Assignment button in the lower right to return to Connect.
Transcribed Image Text:Kleen Corporation, a privately owned and operated single-stream recycling facility, has annual contracts with several cities in the Tri-County Metropolitan Area, Kleen Corporation wants to add a new set of sensors to its existing machinery that will separate plastics and metals from paper and glass materials earlier in the separation process. Two versions of the sensor equipment are available from the Green Corporation. Model 400 has a first cost of $700,000, while Model 1000 costs $1 million. Both have an expected 10% salvage value after their respective useful lives of 6 and 3 years. Assume you work for Kleen Corporation as a project engineer. You have made first-cut estimates of the annual savings (with no annual increases for efficiency) and expenses (AOC with no annual decreases or increases) for both models. Required: a. Perform a ROR analysis using MARR = 5% per year to recommend one of the two models to your president. b. Whether there is any ranking inconsistency present with these two alternatives? If there is, then recommend one of the two models to your president. Model 400 1000 Year Savings, $1000 per year Expenses, $1000 per year Savings, $1000 per year Expenses, $1000 per year 1 180 -40 410 -60 2 3 180 180 -40 -40 410 410 -60 -60 4 180 -40 5 180 -40 6 180 -40 Navigation: 1. Use the Open Excel in New Tab button to launch this question. 2. When finished in Excel, use the Save and Return to Assignment button in the lower right to return to Connect.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 4 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Relevant cost analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS