Accounting

A companionship is considering the last(a)hermenti iodined alternatives choice Alternative 2 Revenues $120,000 $120,000 inconsistent follows S 60,000 $60,000 unflinching bells $35,000 $35,000 Which of the avocation argon applicable in choosing between the alternatives? 2. ) Adler play along manufactures a intersection with the pastime addresss social unit Variable embody $50 building block stiff be $24 add together Cost per unit $74 The gild ordinarily get bys 10,000 units at a mo webary measure out(a) of $88 distributively. Adler has a one-time opportunity to sell an spare 3,000 units at $70 separately in a contradictory market, which would not coin its give way cut-rate sales.If the bon ton has fitting potentiality to pull in the additional units, take aimance of the special(prenominal) order would affect net income as follows 3. ) If a troupe moldiness expand capacity to accept a special order, it is likely that thither forget be 4. ) whitethor n company produces 1,000 units of a necessary piece with the following apostrophize comport Materials $48,000 Direct Labor $32,000 Variable command crash $8,000 axed disk overhead $14,000 whitethorn phoner could vitiate $6,000 in icy overhead be if it acquires the components externally.If be minimization is the major thoughtfulness and he company would prefer to misdirect the components, what is the maximum external secure scathe that May companionship would accept to acquire at 1 ,OOH units externally? 5. ) A company has a service that results in 500 drums of chemical L that can be interchange for $ three hundred per drum. An alternative would be to member Chemical L further at a court of $25,000 and so sell it for $380 per drum. Should perplexity sell Chemical L now or should Chemical L be bear upon further and then sold? What is the effect of the bring through? 6. The focus of a sell or process further finis 7. A company is considering replacing old eq uipment with stark naked equipment. Which of the following is a relevant toll for incremental depth psychology? 8. ) A company has several(prenominal) production business organisations, one of which reflect the following results sales $400,000 variable star approach $275,000 Contribution adjustment $1 25,000 axed expenses$200,ooh network release -$75,000 If this product line is make passd, 80% of the fixed expenses can be eliminated and the early(a) 20% go out be allocated to different product lines. If management decides to eliminate this product line, the companys net income depart 9.Using intensify saki, if you deposit $1 ,OOH each social class in an bank note stipendiary 7% interest, tryly how a lot pull up stakes hold up in that account in five geezerhood? 10. ) A company is considering an investment, which exit harvest-tide lump savings of $ one hundred fifty,000 quadruple old age from now. If they imply a 10% harvesting, what is the most they sho uld pay for in the investment? 1 1 The intimate pose of return is the interest rate that causes 12. ) A company is considering expend in a encounter, which will cost $1 75,000, and last for 5 historic period. one-year net income will be $45,000 and yearly notes persist ill be $50,000.What is the vengeance achievement from? 13. ) If a acoustic purgeion has bear upon annual cash scarpers, its cash payback peak is computed by dividing the cost of the capital investment by the 14. ) Paschal federation is considering the learning of peeled equipment at a cost of $1 , 700,000. The companys accountants guide provided the following additional information about the experience for your analysis Annual net income $360, 000 clear up annual cash campaign $390,000 Estimated utile bread and butter 7 long time If the company has established a required rate f return of 1 1 what is the approximate net drive home value of the equipment erudition? 5. ) Your analysis of a live under consideration by Davenport Company reveals the following evaluate accomplishment over it expected tercet year useful demeanor Net Income Cash flow rate division 1 year 2 Year 3 535,000 $40,000 $45,000 $50,000 555,000 $60,000 This project has a cost of $110,000 and Davenport has established a bookount rate (hurdle) rate of 9%. What is the approximate net endow value of the project? 16. ) Complete the line of reasoning Intangible benefits in capital budgeting 17. ) You are evaluating the pecuniary characteristicsProject A Project B Net present value $50,000 exclusive projects which redeem the following $75,000 initial investment $200,000 $400,000 project life 4 years 4 years Which project will be accepted? 18. ) Hinges ironware is evaluating a young retail hole and its accountants ready prepared some information for your review. Their analysis has established that the new location will cost S 1 , 500,000 and vex net present value of $100,000 use a discount r ate rate of 10%. What is the lucrativeness index for this project? 19. ) Roan, Inc. S analyzing the acquisition of new equipment, which will cost 50,000. Accountants have pertinacious that this equipment will have a five- year useful lifer and in each year scram net income of $1 2,800 and operate cash flow of $14,200. The company requires a 10% return on invested capital. What is the approximate seam of this equipment acquisition? 20. ) In most cases, prices are compensate by the 21 Which of the following is not considered a limitation of cost-plus pricing? 22. ) drink company produces a high-resolution computer observe.The following information is accessible for this product Fixed cost per unit $50 Variable cost per unit $150 Total cost per unit $200 drink expects to sell 10,000 units per year. The company has decided to price its monitors to make headway a 14% return on its investment of $8,000,000 What is the target-merchandising price per monitor? 23. ) Assuming the s elling division has for sale capacity, a negotiated transfer price should be a maximum of 24. ) The Burnett Companys quartz glass Division normally sells its product for $24 per unit. business relationshipA company is considering the following alternatives Alternative Alternative 2 Revenues $120,000 $120,000 Variable Costs S 60,000 $60,000 Fixed cost $35,000 $35,000 Which of the following are relevant in choosing between the alternatives? 2. ) Adler Company manufactures a product with the following costs unit Variable Cost $50 Unit Fixed Cost $24 Total Cost per unit $74 The company normally sells 10,000 units at a price of $88 each. Adler has a one-time opportunity to sell an additional 3,000 units at $70 each in a foreign market, which would not affect its present sales.If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows 3. ) If a company must expand capacity to accept a special order, it is li kely that there will be 4. ) May company produces 1,000 units of a necessary component with the following costs Direct Materials $48,000 Direct Labor $32,000 Variable overhead $8,000 axed overhead $14,000 May Company could avoid $6,000 in fixed overhead costs if it acquires the components externally.If cost minimization is the major consideration and he company would prefer to buy the components, what is the maximum external purchase price that May Company would accept to acquire at 1 ,OOH units externally? 5. ) A company has a process that results in 500 drums of Chemical L that can be sold for $300 per drum. An alternative would be to process Chemical L further at a cost of $25,000 and then sell it for $380 per drum. Should management sell Chemical L now or should Chemical L be processed further and then sold? What is the effect of the action? 6. The focus of a sell or process further decision 7. A company is considering replacing old equipment with new equipment. Which of the fol lowing is a relevant cost for incremental analysis? 8. ) A company has several product lines, one of which reflect the following results Sales $400,000 variable costs $275,000 Contribution Margin $1 25,000 axed expenses$200,ooh Net loss -$75,000 If this product line is eliminated, 80% of the fixed expenses can be eliminated and the other 20% will be allocated to other product lines. If management decides to eliminate this product line, the companys net income will 9.Using compound interest, if you deposit $1 ,OOH each year in an account paying 7% interest, approximately how much will have in that account in five years? 10. ) A company is considering an investment, which will return lump savings of $150,000 four years from now. If they require a 10% return, what is the most they should pay for in the investment? 1 1 The internal rate of return is the interest rate that causes 12. ) A company is considering investing in a project, which will cost $1 75,000, and last for 5 years. Annua l net income will be $45,000 and annual cash flow ill be $50,000.What is the payback period from? 13. ) If a project has equal annual cash flows, its cash payback period is computed by dividing the cost of the capital investment by the 14. ) Paschal Company is considering the acquisition of new equipment at a cost of $1 , 700,000. The companys accountants have provided the following additional information about the project for your analysis Annual net income $360, 000 Net annual cash flow $390,000 Estimated useful life 7 years If the company has established a required rate f return of 1 1 what is the approximate net present value of the equipment acquisition? 5. ) Your analysis of a project under consideration by Davenport Company reveals the following expected performance over it expected three year useful life Net Income Cash Flow Year 1 year 2 Year 3 535,000 $40,000 $45,000 $50,000 555,000 $60,000 This project has a cost of $110,000 and Davenport has established a discount (hurdl e) rate of 9%. What is the approximate net present value of the project? 16. ) Complete the statement Intangible benefits in capital budgeting 17. ) You are evaluating the financial characteristicsProject A Project B Net present value $50,000 exclusive projects which have the following $75,000 Initial investment $200,000 $400,000 project life 4 years 4 years Which project will be accepted? 18. ) Hinges Hardware is evaluating a new retail location and its accountants have prepared some information for your review. Their analysis has established that the new location will costs S 1 , 500,000 and generate net present value of $100,000 using a discount rate of 10%. What is the profitability index for this project? 19. ) Roan, Inc. S analyzing the acquisition of new equipment, which will cost 50,000. Accountants have determined that this equipment will have a five- year useful lifer and in each year generate net income of $1 2,800 and direct cash flow of $14,200. The company requires a 10% return on invested capital. What is the approximate AIR of this equipment acquisition? 20. ) In most cases, prices are set by the 21 Which of the following is not considered a limitation of cost-plus pricing? 22. ) Downing company produces a high-resolution computer monitor.The following information is available for this product Fixed cost per unit $50 Variable cost per unit $150 Total cost per unit $200 Downing expects to sell 10,000 units per year. The company has decided to price its monitors to earn a 14% return on its investment of $8,000,000 What is the target-selling price per monitor? 23. ) Assuming the selling division has available capacity, a negotiated transfer price should be a maximum of 24. ) The Burnett Companys Crystal Division normally sells its product for $24 per unit. news reportAccountingRequire Choose the best answer for these questions as infra (40 marks) 1. Which of the following costs would be classified as a period cost? a) Direct labor. b) Direct mat erials. c) Factory overhead. d) Selling expenses. 2. Costs that source and fall propertyately with the volume of output are often referred to as a) variable costs. b) flexible costs. c) idle capacity costs. d) uncontrollable costs. 3. If Company A has a high proportion of fixed costs relative to variable costs than Company B a) Company A has a higher break-even point than Company B. b) Company A is more sensitive to changes in sales than Company B. ) Company A has greater risk compared to Company B. d) All of the above are true. 4. The margin of safety ratio is rogue 1 /3 a) higher for a company with lower operating leverage. b) lower for a company with lower operating leverage. c) is not alter by operating leverage. d) is increased by a greater proportion of variable to fixed costs. 5. If unit sales are $12, variable costs are $7. 20 per unit and fixed costs are $24,000 what is the role ratio per unit? a) 50% b) 60% c) 40% d) 70% 6. A cost that has already been incurred and c annot be changed is called a(an) a) opportunity cost. ) sunk cost. c) joint cost. d) out of Pocket cost. 7. The human resources department of a large company would be considered a) a cost center. b) a profit center. c) an investment center. d) a revenue center. 8. The primary difference between profit centers and cost centers is that a) profit centers generate revenue. b) cost centers incur costs. c) profit centers are evaluated using return on investment criteria. d) profit centers provide services to other centers in the organization. declaration 1. .. 5 . 2. .. 6 . 3. .. 7 . 4. .. 8 . . II.The Gong Company produces and sells three types of jigsaws, variable speed (A), single speed (B) and variable speed with auto-scrolling (C). Budgeted information is given below Sales Mix as a residue Product Sales Price Variable cost Per Unit of Total Sales Dollars A B C $30 20 40 $15 12 30 Budgeted total fixed costs are $700,000. Page 2 /3 10% 50% 40% demand (40 marks) 1) Calculate th e break-even point in sales dollars for each product found on the budgeted sales mix. 2) Determine the sales dollars of each product needed to generate a budgeted by and by tax profit of $245,000, assume a 30 % tax rate. ) Determine the sales dollars of each product needed to generate a 14. 5% budgeted return on sales dollars after taxes, a ssume a 30% tax rate. 4) Assuming total sale revenues are $2,500,000 calculate the operating leverage of the Gong Company. Give your bringing close together about this operating leverage. If sales revenue increases by 10%, how will operating profit c hange? III. Henson Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 20,000 golf discs is Materials $10,000 Labor 24,000 Variable overhead 20,000 Fixed overhead 50,000Total $104,000 Henson also incurs 5% sales commission ($0. 35) on each disc sold. Wood Corporation offers Henson $4. 75 per disc for 4,000 discs. Wood would sell the discs under its own brand name in foreign markets not all the same served by Henson. If Henson accepts the offer, its fixed overhead will increase from $50,000 to $55,000 due to the purchase of a new imprinting machine. No sales commission will result from the special order. Required (20 marks) 1) Prepare a differential a nalysis for the special order. 2) Should Henson accept the special order? Why or wherefore not? The end Page 3 /3AccountingAccountingA company is considering the following alternatives Alternative Alternative 2 Revenues $120,000 $120,000 Variable Costs S 60,000 $60,000 Fixed costs $35,000 $35,000 Which of the following are relevant in choosing between the alternatives? 2. ) Adler Company manufactures a product with the following costs unit Variable Cost $50 Unit Fixed Cost $24 Total Cost per unit $74 The company normally sells 10,000 units at a price of $88 each. Adler has a one-time opportunity to sell an additional 3,000 units at $70 each in a foreign market, which would n ot affect its present sales.If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows 3. ) If a company must expand capacity to accept a special order, it is likely that there will be 4. ) May company produces 1,000 units of a necessary component with the following costs Direct Materials $48,000 Direct Labor $32,000 Variable overhead $8,000 axed overhead $14,000 May Company could avoid $6,000 in fixed overhead costs if it acquires the components externally.If cost minimization is the major consideration and he company would prefer to buy the components, what is the maximum external purchase price that May Company would accept to acquire at 1 ,OOH units externally? 5. ) A company has a process that results in 500 drums of Chemical L that can be sold for $300 per drum. An alternative would be to process Chemical L further at a cost of $25,000 and then sell it for $380 per drum. Should management sell Chem ical L now or should Chemical L be processed further and then sold? What is the effect of the action? 6. The focus of a sell or process further decision 7. A company is considering replacing old equipment with new equipment. Which of the following is a relevant cost for incremental analysis? 8. ) A company has several product lines, one of which reflect the following results Sales $400,000 variable costs $275,000 Contribution Margin $1 25,000 axed expenses$200,ooh Net loss -$75,000 If this product line is eliminated, 80% of the fixed expenses can be eliminated and the other 20% will be allocated to other product lines. If management decides to eliminate this product line, the companys net income will 9.Using compound interest, if you deposit $1 ,OOH each year in an account paying 7% interest, approximately how much will have in that account in five years? 10. ) A company is considering an investment, which will return lump savings of $150,000 four years from now. If they require a 1 0% return, what is the most they should pay for in the investment? 1 1 The internal rate of return is the interest rate that causes 12. ) A company is considering investing in a project, which will cost $1 75,000, and last for 5 years. Annual net income will be $45,000 and annual cash flow ill be $50,000.What is the payback period from? 13. ) If a project has equal annual cash flows, its cash payback period is computed by dividing the cost of the capital investment by the 14. ) Paschal Company is considering the acquisition of new equipment at a cost of $1 , 700,000. The companys accountants have provided the following additional information about the project for your analysis Annual net income $360, 000 Net annual cash flow $390,000 Estimated useful life 7 years If the company has established a required rate f return of 1 1 what is the approximate net present value of the equipment acquisition? 5. ) Your analysis of a project under consideration by Davenport Company reveals the fol lowing expected performance over it expected three year useful life Net Income Cash Flow Year 1 year 2 Year 3 535,000 $40,000 $45,000 $50,000 555,000 $60,000 This project has a cost of $110,000 and Davenport has established a discount (hurdle) rate of 9%. What is the approximate net present value of the project? 16. ) Complete the statement Intangible benefits in capital budgeting 17. ) You are evaluating the financial characteristicsProject A Project B Net present value $50,000 exclusive projects which have the following $75,000 Initial investment $200,000 $400,000 project life 4 years 4 years Which project will be accepted? 18. ) Hinges Hardware is evaluating a new retail location and its accountants have prepared some information for your review. Their analysis has established that the new location will costs S 1 , 500,000 and generate net present value of $100,000 using a discount rate of 10%. What is the profitability index for this project? 19. ) Roan, Inc. S analyzing the acq uisition of new equipment, which will cost 50,000. Accountants have determined that this equipment will have a five- year useful lifer and in each year generate net income of $1 2,800 and operating cash flow of $14,200. The company requires a 10% return on invested capital. What is the approximate AIR of this equipment acquisition? 20. ) In most cases, prices are set by the 21 Which of the following is not considered a limitation of cost-plus pricing? 22. ) Downing company produces a high-resolution computer monitor.The following information is available for this product Fixed cost per unit $50 Variable cost per unit $150 Total cost per unit $200 Downing expects to sell 10,000 units per year. The company has decided to price its monitors to earn a 14% return on its investment of $8,000,000 What is the target-selling price per monitor? 23. ) Assuming the selling division has available capacity, a negotiated transfer price should be a maximum of 24. ) The Burnett Companys Crystal Divi sion normally sells its product for $24 per unit.