Define capital budgeting and decision making

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Reference no: EM131031751

Part 1:

Welcome to Discussions! Let's start with defining capital budgeting and decision making. What is capital budgeting? What are the differences between screening decisions and preference decisions? Do you ever have occasion to make capital budgeting decisions in your personal life?

Part 2:

For multiple choice questions, please explain why the answer chosen is correct and why the other choices are not correct. Please support your response.

Use the following to answer Questions 4

The following information has been provided by Evans Retail Stores Inc. for the first quarter of the year.

Sales                                              $350,000

Variable selling expenses                  35,000

Fixed selling expenses                      25,000

Cost of goods sold (variable)            160,000

Fixed administrative expenses           55,000

Variable administrative expenses       15,000

1. The gross margin of Evans Retail Stores Inc. for the first quarter is

A) $210,000.
B) $140,000.
C) $220,000.
D) $190,000.

2. Use the following to answer Questions 2

The following selected data pertain to Beck Co.'s Beam Division for last year.

Sales                                            $400,000

Variable expenses                          $100,000

Traceable fixed expenses                $250,000

Average operating assets                $200,000

Minimum required rate of return       20%

3. How much is the residual income?

A) $40,000
B) $50,000
C) $10,000
D) $80,000

Reference no: EM131031751

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