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72.The amount of the average investment for a proposed investment of $60,000 in a fixed asset, with a useful life of four years, straight-line depreciation, no residual value, and an expected total net income of $21,600 for the 4 years, is: A.$10,800 B.$21,600 C.$ 5,400 D.$30,000 73.The amount of the estimated average income for a.
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31.In using the variable cost concept of applying the cost-plus approach to product pricing, fixed manufacturing costs and fixed selling and administrative expenses must be covered by the markup. 32.In using the variable cost concept of applying the cost-plus approach to product pricing, fixed manufacturing costs and both fixed and variable.
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51.In calculating the present value of an investment in equipment, the present value of the terminal residual value should be added to the cash inflows. 52.The time expected to pass before the net cash flows from an investment would return its initial cost is called the amortization period. 53.A company is considering.
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140.The Canine Company has total estimated factory overhead for the year of $2,400,000, divided into four activities: Fabrication, $1,200,000; Assembly, $480,000; Setup, $400,000; and Materials Handling $320,000. Canine manufactures two products: Standard Crates and Deluxe Crates. The activity-base usage quantities for each product by each activity are as follows: Fabrication Assembly Setup Materials Handling Standard 20,000.
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149.Carillion Company is considering the disposal of equipment that is no longer needed for operations. The equipment originally cost $600,000 and accumulated depreciation to date totals $460,000. An offer has been received to lease the machine for its remaining useful life for a total of $290,000, after which the equipment.
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62.The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called: A.absorption cost analysis B.variable cost analysis C.capital investment analysis D.cost-volume-profit analysis 63.Decisions to install new equipment, replace old equipment, and purchase or construct a new building are examples of A.sales mix analysis. B.variable cost analysis. C.capital investment analysis. D.variable cost analysis. 64.Which of.
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82.Using the following partial table of present value of $1 at compound interest, determine the present value of $20,000 to be received four years hence, with earnings at the rate of 10% a year: Year 6% 10% 12% 1 .943 .909 .893 2 .890 .826 .797 3 .840 .751 .712 4 .792 .683 .636 A.$13,660 B.$12,720 C.$15,840 D.$10,400 83.When several alternative investment proposals of the same amount are being considered, the one with the largest.
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92.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.
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106.What pricing concept is used if all costs are considered and a fair mark-up is added to determine the selling price? A.Total cost concept B.Demand-based concept C.Variable cost concept D.Fixed cost concept 107.Which equation better describes Target Costing? A.Selling Price - Desired Profit = Target Costs B.Selling Price - Target Costs = Profit C.Target Variable.
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46.The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is termed: A.manufacturing margin B.contribution margin C.differential cost D.differential revenue 47.The amount of increase or decrease in cost that is expected from a particular course of action as compared with an alternative is.
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142.Gull Corp. is considering selling its old popcorn machine and replacing it with a newer one. The old machine originally cost $5,000 and has been fully depreciated. Annual costs are $4,000. A high school is willing to buy it for $2,000. New equipment would cost $18,000 and annual operating costs.
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41.A qualitative characteristic that may impact upon capital investment analysis is employee morale. 42.A qualitative characteristic that may impact upon capital investment analysis is manufacturing productivity. 43.A qualitative characteristic that may impact upon capital investment analysis is manufacturing control. 44.The process by which management allocates available investment funds among competing capital investment proposals.
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160.Goshawks Co. produces an automotive product and incurs total manufacturing costs of $2,600,000 in the production of 80,000 units. The company desires to earn a profit equal to a 12% rate of return on assets of $960,000. Total selling and administrative expenses are $105,000. (a) Calculate the markup percentage, using the.
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116.Widgeon Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: $55; $78; and $32, respectively. The variable costs for each product are: $20; $50; and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales.
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66.A business received an offer from an exporter for 10,000 units of product at $17 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $20 Unit manufacturing costs: Variable 11 Fixed 1 What is the amount of gain or.
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132.All of the following qualitative considerations may impact upon capital investment analysis except: A.time value of money B.employee morale C.the impact on product quality D.manufacturing flexibility 133.Which of the following provisions of the Internal Revenue Code can be used to reduce the amount of the income tax expense arising from capital investment projects? A.Interest deduction B.Depreciation deduction C.Minimum.
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21.All of the following statements regarding the investment account using the equity method are true except: A. The investment is recorded at cost. B. Dividends received are reported as revenue. C. Net income of investee increases the investment account. D. Dividends received reduce the investment account. E. Amortization of fair value over cost reduces.
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164.Match each of the following terms with the best definition given below. 1.Average income as a percentage of average investment Time value of money concept 2.The investment analysis method that is most often used by large U.S. companies. Net present value method 3.Initial cost divided by Annual net cash inflow of an investment Capital investment.
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136.The Turtle Company has total estimated factory overhead for the year of $1,200,000, divided into four activities: Fabrication, $600,000; Assembly, $240,000; Setup, $200,000; and Materials Handling $160,000. Turtle manufactures two products: Boogie Boards and Surf Boards. The activity-base usage quantities for each product by each activity are as follows: Fabrication Assembly Setup Materials Handling Boogie.
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102.Below is a table for the present value of $1 at Compound interest. Year 6% 10% 12% 1 .943 .909 .893 2 .890 .826 .797 3 .840 .751 .712 4 .792 .683 .636 5 .747 .621 .567 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 .943 .909 .893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables above, what is the present value of $4,000 (rounded to the nearest dollar) to be received at the.
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171.The net present value has been computed for Proposals P and Q. Relevant data are as follows: Proposal P Proposal Q Amount to be invested $265,000 $450,000 Total present value of net cash flow 296,500 425,000 Determine the present value index for each proposal. 172.Vanessa Company is evaluating a project requiring a capital expenditure of $480,000. The project has an.
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112.Heather Company is considering the acquisition of a machine that costs $360,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual cash flow of $120,000, and annual operating income of $83,721. What is the estimated cash payback period for the machine? A.3.
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178.Mundall Company is considering a project that will require an initial investment of $600,000 and is expected to generate the following cash flows: Year 1 $100,000 Year 2 $250,000 Year 3 $250,000 Year 4 $200,000 Year 5 $100,000 A. What is the project’s payback period? B. If the required rate of return is 20% and taxes are.
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158.Moon Company uses the variable cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing and selling 75,000 units of Product T are as follows: Variable costs: Direct materials $ 7.00 Direct labor 3.50 Factory overhead 1.50 Selling and administrative expenses 3.00 Total $ 15.00 Fixed costs: Factory overhead $45,000 Selling.
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168.Proposals M and N each cost $600,000, have 6-year lives, and have expected total cash flows of $750,000. Proposal M is expected to provide equal annual net cash flows of $125,000, while the net cash flows for Proposal N are as follows: Year 1 $250,000 Year 2 $200,000 Year 3 $150,000 Year 4 $75,000 Year 5 $50,000 Year 6 $25,000 Determine the cash.
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11.The excess of the cash flowing in from revenues over the cash flowing out for expenses is termed net discounted cash flow. 12.The computations involved in the net present value method of analyzing capital investment proposals are less involved than those for the average rate of return method. 13.The computations involved in.
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162.Sensational Soft Drinks makes three products: iced tea, soda, and lemonade. The following data are available: Iced Tea Soda Lemonade Sales price per unit $.90 $.60 $.50 Variable cost per unit .30 .15  .10 Contribution margin per unit $.60 $.45 $.40 Sensational is experiencing a bottleneck in one of its processes that affects each product as follows: Iced Tea Soda Lemonade Bottleneck process hours per unit 3 3 4 (a) Using a theory.
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86.When using the product cost concept of applying the cost-plus approach to product pricing, what is included in the markup? A.Desired profit B.Total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit C.Total costs plus desired profit D.Total selling and administrative expenses plus desired profit 87.When using the variable cost concept of.
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1.The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called capital investment analysis. 2.The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called cost-volume-profit analysis. 3.Care must be taken involving capital investment decisions, since normally a long-term commitment.
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1.Differential revenue is the amount of income that would result from the best available alternative proposed use of cash. 2.Differential revenue is the amount of increase or decrease in revenue expected from a particular course of action as compared with an alternative. 3.If the total unit cost of manufacturing Product Y is.
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122.Below is a table for the present value of $1 at compound interest. Year 6% 10% 12% 1 .943 .909 .893 2 .890 .826 .797 3 .840 .751 .712 4 .792 .683 .636 5 .747 .621 .567 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 .943 .909 .893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables above, what would be the present value of $15,000 (rounded to the nearest dollar) to be received at the.
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145.Airflow Company sells a product in a competitive marketplace. Market analysis indicates that their product would probably sell at $28.00 per unit. Airflow management desires a profit equal to a 20% rate of return on invested assets of $1,400,000. They anticipate selling 50,000 units. Their current full cost per unit.
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152.MZE Manufacturing Company has a normal plant capacity of 37,500 units per month. Because of an extra large quantity of inventory on hand, it expects to produce only 30,000 units in May. Monthly fixed costs and expenses are $112,500 ($3 per unit at normal plant capacity) and variable costs and.
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96.Magpie Corporation uses the total cost concept of product pricing. Below is cost information for the production and sale of 60,000 units of its sole product. Magpie desires a profit equal to a 25% rate of return on invested assets of $700,000. Fixed factory overhead cost $38,700 Fixed selling and administrative costs 7,500 Variable direct.
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Multiple Choice Questions 1.Gaw Company owns 15% of the common stock of Trace Corporation and used the fair-value method to account for this investment. Trace reported net income of $110,000 for 2013 and paid dividends of $60,000 on October 1, 2013. How much income should Gaw recognize on this investment in.
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11.On January 3, 2013, Austin Corp. purchased 25% of the voting common stock of Gainsville Co., paying $2,500,000. Austin decided to use the equity method to account for this investment. At the time of the investment, Gainsville's total stockholders' equity was $8,000,000. Austin gathered the following information about Gainsville's assets.
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