Mini Case Chapter $1$

Unlike financial accounting, which is based on historical transactions, managerial accounting is focused primarily on the future. In business, this means managers must often weigh costs against benefits to help make decisions. Consider the following scenario:

Eagle Aircraft, a Light Sport Aircraft $($LSA$)$ manufacturer, is considering whether to expand operations to Europe. If fuel prices continue to increase, the company expects more interest in fuel$-$efficient aircraft. As a result, the company is considering setting up an aircraft assembly plant on the outskirts of Berlin.

Eagle Aircraft estimates that it will cost $$985,000$ to convert an existing building to aircraft production. Workers will need training at a total cost of $$105,000.$ The additional cost to organize the business and to establish relationships is estimated to be $$175,000.$

The CEO believes the company can earn profits from this expansion $($before considering the costs in the preceding paragraph$)$ of $$2,100,000.$

For this mini case, complete the following:

Perform a cyst$-$benefit analysis to determine whether Eagle Aircraft should expand into Europe.

Show your work.

Explain your answer.

Note: You should use Chapter $1,$ page $19$ in Braun and Tietz's Managerial Accounting, $7$th edition to help you with this assignment.

Please proceed to the Mini Case Chapter $2$ section.