Instant Download After Purchase – Click Here.
A company projects an increase in net income of $225,000 each year for the next five years if it invests $900,000 in new equipment. The equipment has a five-year life and an estimated salvage value of $300,000. What is the annual rate of return on this investment?
A. 25.0%
B. 37.5%
C. 50.0%
D. 57.5%
Martin Company incurred the following costs for 50,000 units
Variable costs $180,000
Fixed costs 240,000
Martin has received a special order from a foreign company for 5,000 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $8,500 for shipping. If Martin wants to earn $8,000 on the order, what should the unit price be?
A. $3.30
B. $11.70
C. $5.20
D. $6.90
A total materials variance is analyzed in terms of
A. Price and quantity variances
B. Buy and sell variances
C. Quantity and quality variances
D. Tight and loose variances
A standard cost is
A. A cost which is paid for a group of similar products
B. The average cost in an industry
C. A predetermined cost
D. The historical cost of producing a product last year
The direct materials quantity standard should
A. Exclude unavoidable waste
B. Exclude quality considerations
C. Allow for normal spoilage
D. Always be expressed as an ideal standard
Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered
Old Machine New Machine
Price $250,000 $500,000
Accumulated depreciation 75,000 -0-
Remaining useful life 10 years -0-
Useful life -0- 10 years
Annual operating costs $200,000 $150,500
If the old machine is replaced, it can be sold for $20,000.
Which of the following amounts is a sunk cost?
A. $200,000
B. $150,500
C. $500,000
D. $175,000
Instant Download After Purchase – Click Here.
A company is considering the following alternatives
Alternative 1 Alternative 2
Revenues $120,000 $120,000
Variable costs 60,000 70,000
Fixed costs 35,000 35,000
Which of the following are relevant in choosing between the alternatives?
A. Variable costs
B. Revenues
C. Fixed costs
D. Variable costs and fixed costs
The standard number of hours that should have been worked for the output attained is 10,000 direct labor hours and the actual number of direct labor hours worked was 10,500. If the direct labor price variance was $10,500 unfavorable, and the standard rate of pay was $15 per direct labor hour, what was the actual rate of pay for direct labor?
A. $14 per direct labor hour
B. $12 per direct labor hour
C. $16 per direct labor hour
D. $15 per direct labor hour
The direct materials quantity standard would not be expressed in
A. Pounds
B. Barrels
C. Dollars
D. Board feet
Garza Company is considering buying equipment for $240,000 with a useful life of five years and an estimated salvage value of $12,000. If annual expected income is $21,000, the denominator in computing the annual rate of return is
A. $240,000
B. $120,000
C. $126,000
D. $252,000
The opportunity cost of an alternate course of action that is relevant to a make-or-buy decision is
A. Subtracted from the “Make” costs
B. Added to the “Make” costs
C. Added to the “Buy” costs
D. None of these
A company is deciding on whether to replace some old equipment with new equipment. Which of the following is not a relevant cost for incremental analysis?
A. Annual operating cost of the new equipment
B. Annual operating cost of the old equipment
C. Net cost of the new equipment
D. Accumulated depreciation on the old equipment