Task 1:

Please see detailed calculation in the spreadsheet

Materials have a favourable rate variance of $89,000 and an unfavourable efficiency variance of $44,000.

Labour has no rate variance and an unfavourable efficiency variance of $47,250.

Task 2:

Please see detailed calculation in the spreadsheet.

Quantitively the purchase has a positive NPV. However There is a negative factor that the warranty and training for the
machine are only offered in China, so BEL has to think of the risk of paying repair cost by themselves, also extra
caused due the time and cost staffs needs to get used to the new machine

I will recommend BEL to purchase the TM 3000

Task 3:

Line of Credit:

Interest rate 6.3

Borrowed 100,000

Interest cost 6,300

5-Year Loan

FV 100,000

Interest rate monthly 0.4417%

Term 5 years = 60 terms

PMT = -14,053

Yearly Interest = -2,810.78

Loan from Friend

Borrowed 100,000

Term 5 years

Yearly Interest 2,505,000 * 0.5% = 12,525

In conclusion, I recommend the #2 option – 5 year Loan from bank, since the interest paid is good among the 2. The
bank loan could also offer BEL extra $50k. Comparing to the Line of credit, the bank could possibly callable on
demand at the bank’s option to the Line of credit, the loan could avoid this.