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106.What is the contribution margin per machine hour for Tales? a.$4 b.$7 c. $28 d. $35 107.What is the contribution per machine hour for Wales? a. $35 b. $28 c. $17 d. $7 108.Assuming that Widgeon Co. can sell all of the products it can make, what is the maximum contribution margin itcan earn per month? a. $49,000 b. $70,000 c. $56,000 d. $34,000 109.Assume.
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145.  Proposals M and N each cost $550,000, 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 ProposalN are as follows: Determine the cash payback period for each proposal. Year 1 $250,000 Year 2 200,000 Year.
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121.The management of Idaho Corporation is considering the purchase of a new machine costing $430,000. Thecompany's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing.
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31.A company is considering purchasing a machine for $21,000.  The machine will generate income from operations of$2,000; annual net cash flows from the machine will be $3,500.  The payback period for the new machine is 6years. a.True b.False 32.A company is considering the purchase of a new piece of equipment for $90,000.  Predicted.
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130.  MZE Manufacturing Company has a normal plant capacity of 37,500 units per month. Because of an extra-largequantity 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 expenses are.
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61.The process by which management plans, evaluates, and controls long-term investment decisions involving fixedassets is called a.absorption cost analysis b.variable cost analysis c.capital investment analysis d.cost-volume-profit analysis 62.Decisions to install new equipment, replace old equipment, and purchase or construct a new building are examplesof a.sales mix analysis b.variable cost analysis c.capital investment analysis d.variable cost analysis 63.The methods of evaluating.
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Match each of the definitions that follow with the term (a-e) it defines. Engineering change order Total cost concept Variable cost concept Normal selling price Setup 131.  A document that initiates a product or process change 132.  Includes manufacturing costs plus selling and administrative expenses 133.  Changing tooling when preparing for a new product 134.  Target selling price to.
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145.  What is capital investment analysis?  Why are capital investment analysis decisions often difficult and risky? 146.  Determine the average rate of return for a project that is estimated to yield total income of $600,000 over 4 years,cost $840,000, and has an $80,000 residual value. Round percentage answers to one decimal.
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96.If the company meets the new target cost number, how much will it have to cut costs per unit, if any? a.$1 b.$3 c.$2 d.$0 97.Using the variable cost concept, determine the markup per unit for 30,000 units using the following data: Variable cost per unit$15.00 Total fixed costs$90,000 Desired profita. $10$150,000 b. $15 c. $8 d. $23 The Swan Company produces.
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130.  Moon Company uses the variable cost concept of applying the cost-plus approach to product pricing. The costs andexpenses 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 and administrative expenses 20,000 Moon desires a profit equal to an18%.
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130.  Snipe Company has been purchasing a component, Part Q for $19.20 per unit. Snipe is currently operating at 70%of capacity and no significant increase in production is anticipated in the near future. The cost of manufacturing aunit of Part Q is estimated as follows: Direct materials $11.50 Direct labor 4.50 Variable factory overhead 1.12 Fixed factory.
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130.  Yakking Co. manufactures mobile cellular equipment and develops a price for the product by using the variable costconcept. Yakking incurs variable costs of $1,900,000 in the production of 100,000 units while fixed costs total$50,000. The company employs $4,725,000 of assets and wishes to earn a profit equal to a.
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130.  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 manufacturestwo products, Boogie Boards and Surf Boards. The activity-base usage quantities for each product by each activityare as follows: Fabrication Assembly Setup Materials Handling Boogie Boards 10,000 dlh 30,000.
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31.Cost-plus methods determine the normal selling price by estimating a cost amount per unit and adding a markup. a.True b.False 32.A bottleneck begins when demand for the company’s product exceeds the ability to produce the product. a.True b.False 33.A bottleneck happens when a key piece of manufacturing machinery can produce 1,000 units per hour and demandfor.
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145.  Jimmy Co. is considering a 12-year project that is estimated to cost $1,050,000 and has no residual value. JimmyCo. seeks to earn an average rate of return of 18% on all capital projects. Determine the necessary average annualincome (using straight-line depreciation) that must be achieved on this project for.
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41.The computations involved in the net present value method of analyzing capital investment proposals are moreinvolved than those for the average rate of return method. a.True b.False 42.In net present value analysis for a proposed capital investment, the expected future net cash flows are averagedand then reduced to their present values. a.True b.False 43.In net present.
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76.Should the special order be accepted? a.cannot determine from the data given b.yes c.no d.there would be no difference in accepting or rejecting the special order 77.Mighty Safe Fire Alarm is currently buying 50,000 motherboards from MotherBoard, Inc. at a price of $65 perboard. Mighty Safe is considering making its own boards. The costs to.
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145.  Vanessa Company is evaluating a project requiring a capital expenditure of $480,000. The project has an estimatedlife of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows: Year Net Income Net Cash Flow 1 $  90,000 $210,000 2 80,000 200,000 3 40,000 160,000 4    30,000 150,000 $240,000 $720,000 The company's minimum desired rate of.
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11.Methods that ignore present value in capital investment analysis include the internal rate of return method. a.True b.False 12.Average rate of return equals average investment divided by estimated average annual income. a.True b.False 13.Average rate of return equals estimated average annual income divided by average investment. a.True b.False 14.The method of analyzing capital investment proposals in which the estimated.
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164.  A $400,000 capital investment proposal has an estimated life of 4 years and no residual value. The estimated netcash flows are as follows: Year Net Cash Flow 1 $200,000 2 150,000 3 90,000 4 80,000 The minimum desired rate of return for net present value analysis is 12%. The present value of $1 at compoundinterest of 12% for 1, 2,.
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130.  The Eastwood Cake Factory sells chocolate cakes, birthday decorated cakes, and specialty cakes. The factory isexperiencing a bottleneck and is trying to determine which cake is more profitable. Even though the company mayhave to limit the orders that it takes, Eastwood is concerned about customer service and satisfaction. ? Chocolate Cake ? Birthday.
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86.What cost concept used in applying the cost-plus approach to product pricing covers selling expenses,administrative expenses, and desired profit in the markup? a.total cost concept b.product cost concept c.variable cost concept d.sunk cost concept 87.What cost concept used in applying the cost-plus approach to product pricing includes only total manufacturingcosts in the cost amount to.
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51.In calculating the net present value of an investment in equipment, the required investment and its residual valueshould be subtracted from the present value of all future cash inflows. a.True b.False 52.In calculating the present value of an investment in equipment, the present value of the residual value should beadded to the cash.
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131.A company is contemplating investing in a new piece of manufacturing machinery.  The amount to be invested is$210,000.  The present value of the future cash flows is $225,000.  The company’s desired rate of return used inthe present value calculations was 12%.  Which of the following statements is true? a.The project should.
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164.  A $550,000 capital investment proposal has an estimated life of 4 years and no residual value. The estimated netcash flows are as follows: Year Net Cash Flow 1 $300,000 2 280,000 3 208,000 4 180,000 The minimum desired rate of return for net present value analysis is 12%. The present value of $1 at compoundinterest of 12% for 1, 2,.
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56.What is the differential revenue of producing Product D? a.$6.75 per pound b.$22.25 per pound c.$18.00 per pound d.$6.25 per pound 57.Grace Co. can further process Product B to produce Product C. Product B is currently selling for $60 per poundand costs $38 per pound to produce. Product C would sell for $95 per pound.
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Match the definitions that follow with the term (a-e) it defines. Demand-based concept Competition-based concept Product cost concept Target costing Production bottleneck 131.  Constraint 132.  Combines market-based pricing with a cost-reduction emphasis 133.  Only includes the costs of manufacturing in product cost per unit 134.  Sets the price according to competitors 135.  Sets the price according to demand .
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130.  Hummingbird Company uses the product cost concept of applying the cost-plus approach to product pricing. Thecosts and expenses of producing 25,000 units of Product K are as follows: Variable costs: Direct materials $2.50 Direct labor 4.25 Factory overhead 1.25 Selling and administrative expenses 0.50 Total $8.50 Fixed costs: Factory overhead $25,000 Selling and administrative expenses 17,000 Hummingbird desires a profit equal to a 5% rate.
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46.The amount of increase or decrease in revenue that is expected from a particular course of action as comparedwith an alternative is 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 analternative is a.period cost b.product cost c.differential cost d.discretionary.
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81.The expected average rate of return for a proposed investment of $650,000 in a fixed asset, with a useful life of 4years, straight-line depreciation, no residual value, and an expected total net income of $240,000 for the 4 years, isa. 13.9% b. 36.9% c. 18.5% d. 9.25% 82.Which of the following is notan advantage.
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1.The process by which management plans, evaluates, and controls long-term investment decisions involving fixedassets is called capital investment analysis. a.True b.False 2.Care must be taken involving capital investment decisions, since normally a long-term commitment of funds isinvolved and operations could be affected for many years. a.True b.False 3.Only managers are encouraged to submit capital investment proposals.
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130.  Sensational Soft Drinks makes three products: iced tea, soda, and lemonade. The following data are available: Iced Tea Soda Lemonade Sales price per unit $0.90 $0.60 $0.50 Variable cost per unit 0.30 0.15 0.10 Contribution margin per unit $0.60 $0.45 $0.40 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.
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130.  Hadley Company is considering the disposal of equipment that is no longer needed for operations. The equipmentoriginally cost $600,000 and accumulated depreciation to date totals $460,000. An offer has been received to leasethe machine for its remaining useful life for a total of $290,000, after which the equipment will.
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164.  What is the present value of $8,000 to be received at the end of 6-years if the required rate of return is 15%? Below is a table for the present value of $1 at compound interest. Year 15% Year 15% 1 0.870 6 0.432 2 0.756 7 0.376 3 0.658 8 0.327 4 0.572 9 0.284 5 0.497 10 0.247 Below is a table for the present value of an annuity of $1 at compound.
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145.  Proposals A and B each cost $600,000 and have 5-year lives.   Proposal A is expected to provide equal annual netcash flows of $159,000, while the net cash flows for Proposal B are as follows: Year 1 $150,000 Year 2 140,000 Year 3 110,000 Year 4 150,000 Year 5    50,000 $600,000 Determine the cash payback period for each proposal. Round answers.
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116.The cost per unit for the production and sale of the company's product is a. $12.11 b. $12.88 c. $15.00 d. $13.50 117.The unit selling price for the company's product is a. $15.00 b. $13.82 c. $15.80 d. $14.76 118.The markup percentage on total cost for the company's product isa. 21.0% b. 22.7% c. 15.8% d. 24.0% 119.Contractors who sell to government agencies would.
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21.The expected period of time that will elapse between the date of a capital investment and the complete recovery incash of the amount invested is called the discount period. a.True b.False 22.The expected period of time that will elapse between the date of a capital investment and the complete recovery incash of the.
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91.The production department is proposing the purchase of an automatic insertion machine. It has identified 3machines and has asked the accountant to analyze them to determine the best cash payback. Machine AMachine BMachine C Annual cash flow$40,000$50,000$75,000 Average investment$300,000$250,000$500,000 a.Machine A b.Machine C c.Machine B d.All are equal. 92.The production department is proposing the purchase of an automatic.
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Match each of the definitions that follow with the term (a-e) it defines. a.  Opportunity cost b.  Sunk cost c.  Theory of constraints d.  Differential analysis e.  Product cost distortion 130.  Possible result of using an inappropriate overhead allocation method 131.  Revenue forgone from an alternative use of an asset 132.  Strategy that focuses on reducing bottlenecks 133.  Not.
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66.What is the amount of income or loss from acceptance of the offer? a.$97,500 income b.$94,500 loss c. $37,500 income d. $37,500 loss Rylan Corporation received an offer from an exporter for 25,000 units of product at $16 per unit. The acceptanceof the offer will not affect normal production or domestic sales prices. The following.
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111.By converting dollars to be received in the future into current dollars, the present value methods take intoconsideration that money a.has an international rate of exchange b.is the language of business c.is the measure of assets, liabilities, and stockholders' equity on financial statements d.has a time value Below is a table for the present value.
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71.The expected average rate of return for a proposed investment of $800,000 in a fixed asset with a useful life of 4years, straight-line depreciation, no residual value, and an expected total net income of $360,000 for the 4 years, is a. 45% b. 22.5% c. 11.3% d. 5.5% 72.The amount of the average investment for.
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101.The rate of earnings is 6% and the cash to be received in 4 years is $20,000. The present value amount, using thefollowing partial table of present value of $1 at compound interest is Year6%10%12% 10.9430.9090.893 20.8900.8260.797 30.8400.7510.712 40.7920.6830.636 a. $13,660 b. $12,720 c. $15,840 d. $16,800 102.The present value index is computed using which of the following formulas? a.Amount to.
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130.  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. Caninemanufactures two products, Standard Crates and Deluxe Crates. The activity-base usage quantities for eachproduct by each activity are as follows: ? Fabrication ? Assembly ? Setup Materials handling Standard 20,000 dlh 60,000 dlh 120.
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