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5. (TCO 7) North Company produces a small part that it uses in the production of its Product H. The company's unit product cost for the part, based on a production of 100,000 parts per year, is as follows: .................................................Per part ....................Total Direct Materials............................ $7.00...........$700,000 Direct Labor ..................................6.00............$600,000 Variable Manufacturing Overhead 2.00...........$200,000 Plus: Fixed manufacturing Overhead, (Traceable or avoidable) $300,000 TOTAL, equal to $3 per unit Fixed manufacturing Overhead, (Common---not traceable to any product. Will stay even if no product is manufactured) allocated on basis of labor-hours 6.00) $600,000 Total Unit Product Cost........................... $24.00 (7 + 6 + 2, variable of $15. Plus, Fixed 3+ 6=9, total) An outside supplier has offered to supply parts to the North Company for only $21.25 per part. (It appears to the President of the company that he could save $2.75 per unit.) 100% of the traceable or avoidable fixed manufacturing cost is supervisor salaries and other costs that can be ELIMINATED if the parts are purchased. The decision to buy the parts from the outside supplier would have no effect on the common fixed costs of the company, and the space being used to produce the parts would otherwise be idle. Ignore the impact of income taxes in your calculation. How much would profits increase or decrease as a result of purchasing the parts from the outside supplier rather than making them inside the company? (Points : 25) Question 6. 6. (TCO 9) Harry Corp buys equipment for $222,474 that will last for 10 years. The equipment will generate cash flows of $41,000 per year and will have no salvage value at the end of its life. Ignore taxes. Use 12% required rate of return. (a) What is the Present Value (PV) of this investment (at 12%)? (b) What is the NET Present Value (NPV) of this investment? If you need 12% should you buy the equipment? (c) What is the Internal Rate of Return (IRR) of this investment? (d) What is the payback period? Question 7. 7. (TCO 10) Tanya Corp sells its products on both credit and cash basis. Monthly sales are sold 20% for cash, 80% for credit. Credit sales are collected 65% in the month of sale and 35% the following month. Sales for the first quarter are BUDGETED as follows: January $200,000; February $300,000; March $300,000. Compute cash collections Budgeted for February. How much cash was collected in the month? (Points : 25)
ROCE measures return on assets after the fact. ARR measures potential returns. Why might a finance department be quizzing the proposal manager (PM) about the ARR? And more importantly, why is it important that the PM give a reasonable ARR?
choose two 2 companies in the same industry and work on the criterion mentioned below ltbrgt ltbrgtabusiness overview
Qualitative considerations often play into capital investment analysis. Reflect on an investment that a company you are familiar with has made.
frieden companys contribution format income statement for the most recent month is given below sales 1189000 variable
kaylyn is a 40% partner in the kkm partnership. during the current year, kkm reported gross receipts of $160,0000 and a charitable contribution of $10,000.
how using tax preparation software or internet r e s ources can assist the tax professional in the preparation of tax
How much of the interest is apportioned to U.S. source income?
cristin is an new controller at solequin corp. she was asked to develop the predetermined overhead rate for the
How is an auditors examination affected when a client has engaged in significant related party transactions? What measures should an auditor take to determine that such transactions have been properly recorded by the client?
In a revenue bond, which fund has priority when funds are disbursed from the reserve fund, the operation and maintenance fund or the debt service reserve fund?
Isabella provides 30% of the support for her father Hastings who lives in an apartment by himself and has no gross income. Is it possible for Isabella to claim a dependency exemption for her father? Explain.
The company's cost formula for variable overhead is $9.50 per MH. During the month, the actual total variable overhead was $51,300 and the actual level of activity for the period was 5,700 MHs. What was the variable overhead rate variance for the ..
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