For denniswright | Accounting homework help
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Question 2 (2.5 points)
Cost to Cowboys to make the part:
Direct materials, $4
Direct labor, $16
Variable factory overhead, $18
Fixed factory overhead, $10
Cost to buy the part for Dolphins Company, $36
Which decision should Cowboys make & what is the total cost savings that would result?
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Question 3 (2.5 points)
Company X has gathered the following data for it’s three product lines, X, Y, and Z.
| Product X | Product Y | Product Z | |
| Contribution Margin | $10,000 | $12,000 | $22,500 |
| Units Produced | 1,000 | 2,400 | 1,800 |
| Labor hours required/unit | 4 | 4 | 5 |
| Machine hours required/unit | 4 | 4 | 5 |
If Company X has a limited supply of labor hours, which product(s) should it prefer most?
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Question 4 (2.5 points)
Which of the following statements is true
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Question 5 (2.5 points)
A company uses the net present value method to evaluate planned capital expenditures. Everything else being equal, the lower the required rate of return they use, the ____ will be the net present value.
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Question 6 (2.5 points)
The after-tax net cash inflow on the investment is
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Question 7 (2.5 points)
The payback period is
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Question 8 (2.5 points)
Equipment is purchased at a cost of $39,000. As a result, annual cash revenues will increase by $20,000; annual cash operating expenses will increase by $7,000; straight-line depreciation is used; the asset has a ten-year life; the salvage value is $3,000. Assuming a tax bracket of 34%, determine the accounting rate of return? (round to the nearest %)
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Question 9 (2.5 points)
Shirt Co. wants to purchase a new cutting machine for its sewing plant. The investment is expected to generate annual net cash inflows of $30,000, have a useful life of 8 years, and an estimated salvage value of $10,000. If Shirt Co. has a required rate of return of 12%, the maximum amount they will be willing to spend for this machine is
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Question 10 (2.5 points)
Darlington Company is considering investing in an equipment, which will increase yearly cash revenues by $65000, and yearly cash expenses to operate the equipment by $30,000. The asset will cost $200,000, and will last 8 years, with a salvage value of $40,000. Assuming a tax rate of 39%, determine the net present value of this asset, if the company requires a 10% return on investments.
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Question 11 (2.5 points)
A company uses the net present value methodology in making capital expenditure decisions. In making a decision where they have to choose among two pieces of equipment, which of the following pieces of information will be considered irrelevant
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Question 12 (2.5 points)
Baton Rouge Company is considering purchasing new equipment which will cost $950,000. This equipment is expected to have a useful life of 15 years, have a salvage value of $50,000 and is expected to have an annual net cash inflow (before taxes) of $80,000. Assume the company is in the 34% tax bracket.
What is Baton Rouge’s annual net cash inflow (after taxes)?
|
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Question 13 (2.5 points)
|
|
|
Machine A |
Machine B |
|
Cost |
$600,000 |
$600,000 |
|
Life |
5 yrs |
5 yrs |
|
Yr 1 |
$100,000 |
$500,000 |
|
Yr 2 |
$200,000 |
$400,000 |
|
Yr 3 |
$300,000 |
$300,000 |
|
Yr 4 |
$400,000 |
$200,000 |
|
Yr 5 |
$500,000 |
$100,000 |
Co. X uses the net present value method to evaluate capital expenditures. Which of the following two machines has the higher net present value?
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Question 14 (2.5 points)
|
Product |
Cases |
Selling Price/Case |
Additional Costs/Case |
|
Catsup |
100,000 |
$10 |
$2 |
|
Tomato Juice |
150,000 |
$8 |
$1 |
|
Canned Tomatoes |
250,000 |
$12 |
$3 |
The joint cost allocated to Canned Tomatoes (using the net realizable value method) is (round to the closest $)
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Question 15 (2.5 points)
|
Product |
Cases |
Selling Price/Case |
Additional Costs/Case |
|
Catsup |
100,000 |
$10 |
$2 |
|
Tomato Juice |
150,000 |
$8 |
$1 |
|
Canned Tomatoes |
250,000 |
$12 |
$3 |
Red Sauce Canning Company is considering an option to further refine Catsup. By incurring an additional cost of $60,000, they will be able to increase their selling price of Catsup to $11.20 per case. Determine the incremental advantage (disadvantage) of this option? (round to the closest $)
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Question 16 (2.5 points)
|
Product |
Cases |
Selling Price/Case |
Additional Costs/Case |
|
Catsup |
100,000 |
$10 |
$2 |
|
Tomato Juice |
150,000 |
$8 |
$1 |
|
Canned Tomatoes |
250,000 |
$12 |
$3 |
If the company has a philosophy of marking up their products 20% over cost, the selling price per case of Tomato Juice should be (using the net realizable value method) (round to 2 decimal places)
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Question 17 (2.5 points)
Red Sauce Canning Company processes tomatoes into catsup, tomato juice, and canned tomatoes. During November, they incurred joint processing costs of $420,000. Production and sales value information for November are as follows:
|
Product |
Cases |
Selling Price/Case |
Additional Costs/Case |
|
Catsup |
100,000 |
$10 |
$2 |
|
Tomato Juice |
150,000 |
$8 |
$1 |
|
Canned Tomatoes |
250,000 |
$12 |
$3 |
The unit cost per case of Canned Tomatoes (using the physical volume method) is (round to 2 decimal places)
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Question 18 (2.5 points)
A cost that is incurred between the split-off point and the point of sale is known as a: