Reference no: EM13971606
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Standard
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Actual
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|
Rate
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$12.00
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$12.25
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Hours
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18,500
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17,955
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Units of Production
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9,450
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1. Calculate the Total Direct Labor Variance using the above information
A) $2,051.25 Favorable
B) $2,051.25 Unfavorable
C) $2,362.50 Unfavorable
D) $2,362.50 Favorable
2. The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:
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Standard Costs
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|
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Fixed overhead (based on 10,000 hours)
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3 hours @ $.80 per hour
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Variable overhead
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3 hours @ $2.00 per hour
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Actual Costs
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|
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Total variable cost, $18,000
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|
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Total fixed cost, $8,000
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The amount of the total factory overhead cost variance is:
A) $5,000 unfavorable
B) $2,000 favorable
C) $0
D) $2,500 unfavorable
3. The management of Nebraska Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation:
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Year
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Income from
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Net Cash
|
|
Operations
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Flow
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1
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$100,000
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$180,000
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2
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40,000
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120,000
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|
3
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40,000
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100,000
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|
4
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10,000
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90,000
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5
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10,000
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120,000
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The average rate of return for this investment is:
A) 58%
B) 10%
C) 18%
D) 16%
4. Department G had 3,600 units, 25% completed at the beginning of the period, 11,000 units were completed during the period, 3,000 units were one-fifth completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period:
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Work in process, beginning of period
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$40,000
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Costs added during period:
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Direct materials (10,400 at $8)
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83,200
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Direct labor
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63,000
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Factory overhead
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25,000
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Assuming that all direct materials are placed in process at the beginning of production and that the first-in, first-out method of inventory costing is used, what is the total cost of 3,600 units of beginning inventory which were completed during the period (round unit cost calculations to four decimal places)?
A) $62,206
B) $19,275
C) $16,163
D) $40,000
5. A business is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $15 per unit. The unit cost for the business to make the part is $20, including fixed costs, and $12, not including fixed costs. If 30,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it?
A) $ 90,000 cost increase
B) $ 90,000 cost decrease
C) $150,000 cost increase
D) $150,000 cost increase
6. A business received an offer from an exporter for 20,000 units of product at $15 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:
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Domestic unit sales price
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$21
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Unit manufacturing costs:
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Variable
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12
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Fixed
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5
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What is the differential revenue from the acceptance of the offer?
A) $240,000
B) $420,000
C) $120,000
D) $300,000
7. Quail Co. can further process Product B to produce Product C. Product B is currently selling for $60 per pound and costs $42 per pound to produce. Product C would sell for $82 per pound and would require an additional cost of $13 per pound to produce. What is the differential revenue of producing and selling Product C?
A) $18 per pound
B) $45 per pound
C) $42 per pound
D) $22 per pound
8. The production department is proposing the purchase of an automatic insertion machine. They have identified 3 machines and have asked the accountant to analyze them to determine the best average rate of return.
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Machine A
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Machine B
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Machine C
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Estimated Average Income
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$40,000
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$50,000
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$75,000
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Average Investment
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$300,000
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$250,000
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$500,000
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A) Machine A
B) Machine B
C) Machine B or C
D) Machine C
9. The cost of merchandise sold during the year was $45,000. Merchandise inventories were $13,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $7,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total
A) $44,000
B) $50,000
C) $46,000
D) $40,000
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Standard
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Actual
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Variable OH Rate
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$3.35
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Fixed OH Rate
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$1.80
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|
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Hours
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18,900
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17,955
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Fixed Overhead
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$46,000
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Actual Variable Overhead
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$67,430
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Total Factory Overhead
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$101,450
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10. Calculate the variable factory overhead controllable variance using the above information:
A) $7,280.75 Favorable
B) $7,280.75 Unfavorable
C) $8,981.75 Favorable
D) $8,981.75 Unfavorable
11. Assume that Penguin Co. is considering disposing of equipment that cost $50,000 and has $40,000 of accumulated depreciation to date. Penguin Co. can sell the equipment through a broker for $25,000 less 5% commission. Alternatively, Teal Co. has offered to lease the equipment for five years for a total of $48,750. Penguin will incur repair, insurance, and property tax expenses estimated at $10,000. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is:
A) $15,000
B) $12,500
C) $25,000
D) $ 5,000
12. The management of Arkansas Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation:
|
Year
|
Income from
|
Net Cash
|
|
Operations
|
Flow
|
|
1
|
$100,000
|
$180,000
|
|
2
|
40,000
|
120,000
|
|
3
|
40,000
|
100,000
|
|
4
|
10,000
|
90,000
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|
5
|
10,000
|
120,000
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The net present value for this investment is:
A) positive $36,400
B) Negative $126,800
C) positive $55,200
D) Negative $16,170
13. Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below.
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Activity
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Activity Base
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Cost
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Procurement
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$370,000
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Number of purchase orders
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|
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Scheduling
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250,000
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Number of production orders
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Materials handling
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500,000
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Number of moves
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Product development
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730,000
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Number of engineering changes
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Production
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1,500,000
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Machine hours
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|
|
|
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Number of
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Number
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Number
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Number of Engineering
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Machine
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Number
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Purchase
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of
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of
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Changes
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Hours
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of
|
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Orders
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Production
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Moves
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Units
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Orders
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|
|
|
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Disk drives
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4,000
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|
300
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1,400
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10
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2,000
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2,000
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Tape drives
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4,000
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150
|
800
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10
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8,000
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4,000
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Wire drives
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12,000
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|
800
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4,000
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25
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10,000
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2,500
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Determine the activity-based cost for each wire drive unit.
A) $744.06
B) $173.51
C) $394.12
D) $204.13
14. The St. Augustine Corporation originally budgeted for $360,000 of fixed overhead. Production was budgeted to be 12,000 units. The standard hours for production were 5 hours per unit. The variable overhead rate was $3 per hour. Actual fixed overhead was $360,000 and actual variable overhead was $170,000. Actual production was 11,700 units.
Compute the factory overhead volume variance.
A) $5,500F
B) $9,000U
C) $5,500U
D) $9,000F
15. The condensed income statement for a business for the past year is presented as follows:
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Product
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|
|
|
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F
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G
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H
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Total
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Sales
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$300,000
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$210,000
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$340,000
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$850,000
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Less variable costs
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180,000
|
190,000
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220,000
|
590,000
|
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Contribution margin
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$120,000
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$20,000
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$120,000
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$260,000
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Less fixed costs
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50,000
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50,000
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40,000
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140,000
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Income (loss) from oper.
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$70,000
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($30,000)
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$80,000
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$120,000
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Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G?
A) $30,000 increase
B) $20,000 decrease
C) $30,000 decrease
D) $20,000 increase
16. The management of Nebraska Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation:
Year Income from Net Cash
|
Year
|
Income from
|
Net Cash
|
| |
Operations
|
Flow
|
|
1
|
$100,000
|
$180,000
|
|
2
|
40,000
|
120,000
|
|
3
|
40,000
|
100,000
|
|
4
|
10,000
|
90,000
|
|
5
|
10,000
|
120,000
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The cash payback period for this investment is:
A) 5 years
B) 4 years
C) 3 years
D) 2 years
17. Production estimates for July are as follows:
Estimated inventory (units), July 1 8,500
Desired inventory (units), July 31 10,500
Expected sales volume (units), July 76,000
For each unit produced, the direct materials requirements are as follows:
Direct material A ($5 per lb.) 3 lbs.
Direct material B ($18 per lb.) 1/2 lb.
The number of pounds of materials A and B required for July production is:
A) 216,000 lbs. of A; 72,000 lbs. of B
B) 216,000 lbs. of A; 36,000 lbs. of B
C) 225,000 lbs. of A; 37,500 lbs. of B
D) 234,000 lbs. of A; 39,000 lbs. of B
18. The rate of earnings is 10% and the cash to be received in three years is $10,000. Determine the present value amount, using the following partial table of present value of $1 at compound interest:
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Year
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6%
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10%
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12%
|
|
1
|
0.943
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0.909
|
0.893
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|
2
|
0.89
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0.826
|
0.797
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|
3
|
0.84
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0.751
|
0.712
|
|
4
|
0.792
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0.683
|
0.636
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A) $8,260
B) $7,510
C) $13,316
D) $6,830
19. The Marx Company issued $100,000 of 12% bonds on April 1, 2010 at face value. The bonds pay interest semiannually on January 1 and July 1. The bonds are dated January 1, 2010, and mature on January 1, 2014. The total interest expense related to these bonds for the year ended December 31, 2010 is
A) $3,000
B) $1,000
C) $9,000
D) 12,000
20. Zipee Inc.'s unit selling price is $90, the unit variable costs are $40.50, fixed costs are $170,000, and current sales are 12,000 units. How much will operating income change if sales increase by 5,000 units?
A) $175,000 increase
B) $125,000 decrease
C) $75,000 increase
D) $247,500 increase