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Accounting Expert Answers & Study Resources : Page 202

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29) A company is evaluating 3 possible investments.  Each uses straight-line depreciation.  See data below: Project A Project B Project C Investment $400,000 $20,000 $100,000 Salvage value $0 $2,000 $5,000 Net cash flows:    Year 1 $100,000 $10,000 $40,000    Year 2 $100,000 $8,000 $25,000    Year 3 $100,000 $5,000 $30,000    Year 4 $100,000 $3,000 $10,000    Year 5 $100,000 $0.

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  • 29) A company evaluating 3 possible investments.  Each uses straight-line
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48) Potlatch Company manufactures sonars for fishing boats.  Model 100 sells for $200.  Potlatch produces and sells 5,000 of them per year.  Cost data are as follows: Variable manufacturing $105.00 Per unit Variable marketing $5.00 Per unit Fixed manufacturing $270,000 Per year Fixed marketing & admin $140,000 Per year An offer has come in for a one time sale.

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  • 48) Potlatch Company manufactures sonars for fishing boats.  Model 100
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19) A company has two different products that sell to separate markets.  Financial data are as follows: Product A Product B Total Revenue $12,000 $8,000 $20,000 Variable cost ($7,500) ($8,100) ($15,600) Fixed cost (allocated) ($3,000) ($1,000) ($4,000) Operating income $1,500 ($1,100) $400 Assume that fixed costs of $500 could be eliminated if product B was dropped; assume furthermore that dropping one product would not impact.

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  • 19) A company has two different products that sell to
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9) The rate of return is the only capital budgeting method that uses accrual accounting. Answer:  TRUE Diff: 1 LO:  21-2 EOC Ref:  E21-17 AACSB:  Analytic Skills AICPA Business:  Critical Thinking AICPA Functional:  Measurement 10) The rate of return calculations ignores the time value of money, but the payback period does include consideration of the time value of.

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  • 9) The rate of return the only capital budgeting method
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Learning Objective 20-4 1) Dong Fang Company fabricates inexpensive automobiles for sale to 3rd world countries.  Each auto includes one wiring harness, which is currently made in-house.  Details of the harness fabrication are as follows: Volume 900 Units per month Variable cost per unit $8.00 Per unit Fixed costs $14,000 Per month A factory in Indonesia.

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  • Learning Objective 20-4 1) Dong Fang Company fabricates inexpensive automobiles
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15) Carte Blanco Company is evaluating an investment of $1,000,000 which will yield cash flows of $257,000 per year for 5 years with no residual value. Present Value of an Annuity of $1 5% 6% 7% 8% 9% 10% 1 0.952 0.943 0.935 0.926 0.917 0.909 2 1.859 1.833 1.808 1.783 1.759 1.736 3 2.723 2.673 2.624 2.577 2.531 2.487 4 3.546 3.465 3.387 3.312 3.240 3.170 5 4.329 4.212 4.100 3.993 3.890 3.791 If Carte Blanco has a hurdle rate of 10%, they should accept the investment because its internal rate of.

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  • 15) Carte Blanco Company evaluating an investment of $1,000,000 which
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31) Archetype Fabrication makes pre-stressed concrete forms for the building industry. They use just-in-time production and accounting methodology.  At the beginning of January, selected account balances are shown in the T-accounts below. During January, the following 5 transactions take place: 1.Purchase $40,000 of materials on account. 2.Pay out $25,000 of direct labor costs. 3.Incur.

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  • 31) Archetype Fabrication makes pre-stressed concrete forms for the building
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8) Potlatch Company manufactures sonars for fishing boats.  Model 100 sells for $200.  Potlatch produces and sells 5,000 of them per year.  Cost data are as follows: Variable manufacturing $105.00 Per unit Variable marketing $5.00 Per unit Fixed manufacturing $270,000 Per year Fixed marketing & admin $140,000 Per year A potential deal has come up for a one time.

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  • 8) Potlatch Company manufactures sonars for fishing boats.  Model 100
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21) Which of the following describes the purpose of a post-audit? A) To screen initial investment alternatives B) To determine whether investments are going as planned, or whether they should be abandoned C) To determine the amount of the initial investment outlay D) To evaluate the company's internal controls Answer:  B Diff: 1 LO:  21-1 EOC Ref:  S21-1 AACSB: .

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  • 21) Which of the following describes the purpose of a
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21) Johnson Production Company uses just-in-time production and accounting methods.  On June 1, Johnson paid $6,000 for factory repair and maintenance costs in cash. Which of the following journal entries correctly records this transaction? A) Debit $6,000 to Cash, credit $6,000 to Manufacturing overhead. B) Debit $6,000 to Raw and in-process inventory,.

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  • 21) Johnson Production Company uses just-in-time production and accounting methods. 
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18) Pueblo Products is a price-taker and uses target pricing.  Pueblo has just done an analysis of their revenues, costs and desired profits, and has calculated its target full cost.  Please refer to the following information: Target full cost $400,000 Per year Actual fixed cost $160,000 Per year Actual variable cost $1.00 Per unit Production volume 250,000 Units.

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  • 18) Pueblo Products a price-taker and uses target pricing.  Pueblo
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19) Logan, Inc. is evaluating two possible investments in depreciable plant assets. The company uses the straight-line method of depreciation. The following information is available: Investment A Investment B Initial capital investment $60,000 $90,000 Estimated useful life 3 years 3 years Estimated residual value — 0 — — 0 — Estimated annual net cash inflow for 3 years $25,000 $40,000 Required rate of return 10% 12% How long.

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  • 19) Logan, Inc. evaluating two possible investments in depreciable plant
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16) If Arthur Godfried invests $1,000 today at a rate of 7% compounding yearly, what will the value of the investment be in 4 years? Future Value of $1 4% 5% 6% 7% 8% 9% 1 1.040 1.050 1.060 1.070 1.080 1.090 2 1.082 1.103 1.124 1.145 1.166 1.188 3 1.125 1.158 1.191 1.225 1.260 1.295 4 1.170 1.216 1.262 1.311 1.360 1.412 5 1.217 1.276 1.338 1.403 1.469 1.539 6 1.265 1.340 1.419 1.501 1.587 1.677 7 1.316 1.407 1.504 1.606 1.714 1.828 8 1.369 1.477 1.594 1.718 1.851 1.993 9 1.423 1.551 1.689 1.838 1.999 2.172 10 1.480 1.629 1.791 1.967 2.159 2.367 A) $1,311 B) $1,967 C) $1,316 D) $1,000 Answer:  A Explanation:  A) Calculations:  1.311 × $1,000 = $1,311 Diff: 2 LO:  21-3 EOC Ref:  S21-8 AACSB:  Analytic Skills AICPA Business:  Critical Thinking AICPA Functional: .

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  • 16) If Arthur Godfried invests $1,000 today at a rate
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28) Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, and is currently producing and selling 20,000 sails per year. The following information relates to current production: Sale price per unit $150 Variable costs per unit:     Manufacturing 55     Marketing and administrative 25 Total fixed costs:     Manufacturing $640,000     Marketing and.

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  • 28) Lowwater Sailmakers manufactures sails for sailboats. The company has
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29) Which of the following statements describes a scenario when management should consider dropping a business division? A) The division has consistently reported an operating loss. B) The division's avoidable fixed costs are less than its contribution margin. C) The division's avoidable fixed costs are greater than its contribution margin. D) The division's unavoidable.

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  • 29) Which of the following statements describes a scenario when
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