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business
economics 14th global
Questions and Answers of
Economics 14th Global
Reconsider Problem 47 exactly as written.a. Determine the real after-tax cash flows for each year.b. Determine the PW of the after-tax cash flows.c. Determine the AW of the after-tax cash flows.d.
Henredon purchases a high-precision programmable router for shaping furniture components for \($190,000.\) It is expected to last 12 years and have a salvage value of \($5,000.\) Henredon will borrow
Reconsider Problem 49 exactly as written.a. Determine the real after-tax cash flows for each year.b. Determine the PW of the after-tax cash flows.c. Determine the AW of the after-tax cash flows.d.
Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for
Electronic Games is moving very quickly to introduce a new interrelated set of video games. The initial investment for equipment to produce the necessary electronic components is \($9\) million, with
If the total cost for producing widgets can be represented by \(T C=8,000+0.75 X\), where \(X\) is the number of widgets produced and total revenue can be represented by \(T R=4.00 X\), what is the
True or False: In the absence of perfect information accurate investment decisions cannot be made.
True or False: Break-even analysis is a brand new concept, nothing like it has been presented previously in the book.
The analysis is most sensitive to changes in which component?a. Annual revenueb. Initial investmentc. Salvage valued. Cannot be determined from the information given
True or False: Sensitivity analysis is a technique used by psychologists to gauge a person's reaction to criticism.
The analysis is least sensitive to changes in which component?a. Annual revenueb. Initial investmentc. Salvage valued. Cannot be determined from the information given
True or False: Risk analyses are performed when complete uncertainty exists and no reasonable estimates can be made regarding the probability of occurrence of parameter values.
True or False: If the cost of producing one unit of product is uniformly distributed with a mean of \(25 \phi\) and a standard deviation of \(10 \phi\), then the cost of producing 1000 units of
If a line for "annual expenses" was to be added to the graph, what slope would you expect the line to have?a. Positive slope (line rises as it goes left to right)b. Negative slope (line falls as it
True or False: If producing one unit of product has a mean cost of \(25 \phi\) and a standard deviation of \(10 \phi\), then there will be a 0.999 probability of it costing less than \$260 to produce
Which of the following is not a method typically used for supplementary analysis WILEY \(\boldsymbol{\oplus}\) of engineering economy problems?a. Break-even analysisb. Depreciation analysisc. Risk
True or False: if producing one unit of produce has a mean cost of \(25 \phi\) and a standard deviation of \(10 \phi\), then there will be a 0.841 probability of it costing less than \(\$ 260\) to
The probability of weather-related crop damage during the growing season in a typical year is given by the following table. If the interest rate is 8 percent, what is the expected present worth of
True or False: If \(X\) and \(Y\) are independent random variables with expected values and variances of \(\mathrm{E}(\mathrm{X}), \mathrm{E}(\mathrm{Y}), \mathrm{V}(\mathrm{X})\), and
True or False: @RISK simulation is limited to Latin Hypercube sampling.
After making changes to the production line, Gooey Bites made a profit of \(\$ 36,000\) by selling 20,000 snack packs. Variable costs were modified by the line changes, but fixed costs were
On a balance sheet, a corporation's economic obligations to nonowners are calleda. owners' equity.b. liabilities.c. assets.d. retained earnings.
The information below has been extracted from the books of the Shelley Company. Which of the following represents Shelley's current ratio?a. 0.76b. 1.48c. 2.05d. 2.51 Current Assets Cash Current
The fundamental equation used within an accounting balance sheet isa. net profit \(=\) gross profit - expenses - taxes.b. \(\quad\) assets + liabilities \(=\) net worth.c. assets + liabilities + net
Marginal cost isa. any cost occurring after "time now."b. the ratio of total cost to total quantity of output.c. the market value of an asset at the end of its life less its disposal costs.d. the
The three major categories that comprise cost of goods manufactured area. material, labor, and overhead.b. average, marginal, and instantaneous.c. past, present, and future.d. initial, operating, and
The total cost equation for producing \(X\) widgets is given by \(\mathrm{TC}=\$ 1,000+\$ 6 X\). The average cost per widget for producing 500 widgets is closest to which of the following?a. \(\$
The total cost equation for producing \(X\) widgets is given by \(\mathrm{TC}=\$ 1,000+\$ 6 X\). The variable cost per widget is closest to which of the following?a. \(\$ 1,000\)b. \(\$ 6\)c. \(\$
The total cost equation for producing \(X\) widgets is given by \(\mathrm{TC}=\$ 1,000+\$ 6 X\). The marginal cost per widget at a production level of 300 units is closest to which of the
Fixed cost isa. any cost that does not vary with the quantity of output.b. the ratio of total cost to total quantity of output.c. the market value of an asset at the end of its life less its disposal
When an organization considers its work-in-process, how should it be classified on a balance sheet?a. Assetb. Liabilityc. Net worthd. Expense
Reconsider the scenario presented in Example 16.1, which details a firm considering purchasing a small turret lathe to manufacture part number 163H for the B&K Corporation.a. What additional
Match the terms in the first column with the appropriate definition in the second column. Terms (a) First cost (b) Average cost (c) Fixed cost (d) Overhead cost (e) Marginal cost (f) Opportunity cost
A firm has the capacity to produce 1,000,000 units of a product each year. At present, it is operating at 70 percent of capacity. The firm’s annual revenue is \($700,000.\) Annual fixed costs are
Two production methods are being considered for making thermal dryers. Method 1 has a fixed cost of \($1,000\) and a variable cost of \($20\) per unit. Method 2 has a fixed cost of \($400\) and a
The maker of Winglow is purchasing a new stamping machine. Two options are being considered, Rooney and Blair. The sales forecast for Winglow is 8,000 units for next year. If purchased, the Rooney
Product X is sold for $500 per unit. The total cost of production per year, including capital recovery and a return, is given by the expression TC ¼ 0:04n3 700n þ 50,000 where n is the number of
The cost curve for producing widgets passes through the following points and is piecewise linear in between.a. What is the fixed cost of producing 600 widgets?b. What is the variable cost of
A manufacturer of precision cutting tools has the capacity to make \(1,000,000\) cutting tools per year. Each sells for \(\$ 15\). The variable cost per unit to produce the cutting tools is \(\$ 9\)
A new engineering building at a state university is to contain \(10,000,000\) square feet. The total cost of the building (TC) is given by the following expression:\[\mathrm{TC}=\left(200+80 X+2
The KMP Metal Machining Company produces widgets according to customer order. The company has determined that widgets can be produced on three different machine tools: M1, M2, or M3. An analysis of
Two processes are put in place for production. Neither will be removed. Process \(R\) is designed to produce 10,000 units per year and has a fixed cost of \(\$ 90,000\) per year. Process \(T\) has
The variable cost of producing specialty value-added stainless-steel tubing varies according to the quantity produced per year. The variable cost is \(\$ 500\) per ton from 0 to 700 tons. Above this
Find three Web sites where "cost estimating" is a topic.a. State the URL for each of the sites.b. Identify the one you would likely find most useful if you wanted to learn more about cost
A distributor has learned that an estimate for the packaging and processing costs can be predicted based on the weight of an order. To this end, a regression analysis is performed resulting in the
For each of the situations below, identify a potential source of analogy data for the costs under each of the following cases: (1) this project/activity is a first of its kind for the company, and
A circuit board manufacturer is trying to determine the appropriate cost driver for estimating the cost of circuit board assembly support. The list of potential cost drivers has been narrowed to
Determine the missing values below to produce a valid balance sheet. ASSETS Cash BALANCE SHEET Year Ending December 31, 2004 Accounts receivable.. Raw materials inventory.. Work-in-process inventory.
Following is a list of balance sheet accounts for Branman Co. as of December 31, 2005.a. Classify each of the following accounts as an asset, liability, or net worth.b. What is the balance in the
The Scott Company shows the following alphabetical list of account balances as of December 31, 2006.a. Construct a balance sheet for Scott Company as of December 31, 2006.b. Demonstrate that the
In addition to the account balances in the previous problem, Scott Company recorded the following summary transactions for the year ending December 31, 2006.Construct an income statement for Scott
Betty Smith is the owner of Accurate Tax Service. For the year ending April 30, 2007, the following information is available for this service business. At the beginning of this accounting period, the
As published in its annual report, the balance sheet and income statements of JanCo include the items shown below (listed alphabetically). All balances are as shown on the statements; no additional
As published in its annual report, the consolidated balance sheet of Packers includes the items shown below (listed alphabetically).a. Determine the values for the missing items.b. Prepare a balance
The annual report from a major energy company contains the following: Net income represented 9 percent return on average total assets of approximately \($27\) billion and a 19 percent return on
Consider the comparative balance sheet and income statement for Starbucks provided in Figures 16.8 and 16.9.Figure 1.9Based on these financial statements, determine the following for the year ending
Find three Web sites where ‘‘financial ratios’’ is a topic.a. State the URL for each of the sites.b. Identify the one you would likely find most useful if you wanted to learn more about
The Bryant Company manufactures a custom-designed part for the aerospace industry. Within the production facility, there are five operating departments. The sequence of departments through which the
EmKay Company is divided into two departments for accounting purposes. The direct labor hours and overhead costs for the last year are as follows:What selling price should the company quote on Job
For a small manufacturing firm, a current-period job that requires 35 hours of direct labor is to be allocated $437.50 of overhead cost based on a rate developed from previous period data. The
To make a batch of 1,000 units of a certain item, it is estimated that 120 direct labor hours are required at a cost of \($10/hour.\) Direct material costs are estimated at \($1,500\) per batch. The
Consider the following table (shown in two parts):a. What is the EVA in year 8?b. What is the capital charge in year 9? OPERATING NET EOY REVENUE EXPENSES DEPRECIATION OPERATING PROFIT TAXES 8
Consider the following table (shown in two parts):a. What is the EVA in year 5?b. What is the capital charge in year 6? OPERATING NET EOY REVENUE EXPENSES DEPRECIATION OPERATING PROFIT TAXES 5
A company is considering purchasing a new piece of machinery at a cost \($60,000.\) It is expected to generate revenues of \($20,000\) per year for 4 years against \($3,000\) of annual operating
Given the following information for LiveWire Electronics, construct an income statement for themonth ending June 30. Sales $500,000 Cost of goods sold $170,000 Administration cost $75,000 Advertising
A company is considering purchasing a new piece of machinery at a cost \($50,000.\) It is expected to generate revenues of \($25,000\) per year for 4 years against \($1,500\) of annual operating
Cost Center D within the Welding Department of the Mizer Corporation collected the following data during 2004.Cost Center D Overhead Expenses: \($4,800\) Cost Center D Direct Labor Hours: 2,800 Cost
Find three Web sites where ‘‘activity-based costing’’ (ABC) is a topic.a. State the URL for each of the sites.b. Identify the one you would likely find most useful if you wanted to learn more
Find three Web sites where ‘‘economic value added’’ (EVA) is a topic.a. State the URL for each of the sites.b. Identify the one you would likely find most useful if you wanted to learn more
Skrunchy Company produces two products, Lower and Upper. The following two tables give pertinent information about these two products.a. What is the cost per unit of Upper if Skrunchy uses
Reconsider Problem 39.a. What is the cost per unit of Lower if Skrunchy uses traditional overhead allocation based on direct labor hours?b. What is the cost per unit of Lower if Skrunchy uses
LockTite Company produces two products, Pretty Safe (PS) and Virtually Impenetrable (VI). The following two tables give pertinent information about these products.a. What is the cost per unit of
Reconsider Problem 41.a. What is the cost per unit of Virtually Impenetrable if LockTite uses traditional overhead allocation based on number of units produced?b. What is the cost per unit of
True or False: Engineers seldom have an opportunity to influence the recovery period for expenditures.
True or False: Straight-line depreciation is the most popular depreciation method used in financial reporting.
A lumber company purchases and installs a wood chipper for \(\$ 200,000\). The chipper is classified as MACRS 7-year property. Its useful life is 10 years. The estimated salvage value at the end of
SteelTubes had sales of \($300\) million this year. Expenses were \($250\) million. Aside from these figures, the company also invested in new mills for carbon steel tubing, complete with peripheral
True or False: The Modified Accelerated Cost Recovery System is the most popular depreciation method used in computing corporate income tax liabilities.
A lumber company purchases and installs a wood chipper for \(\$ 200,000\). The chipper is classified as MACRS 7-year property. Its useful life is 10 years. The estimated salvage value at the end of
Taxes are paid each year on some measure of financial gain. We typically think of financial gain as ‘‘cash inflows minus cash outflows,’’ and yet simply subtracting outflows due to capital
True or False: Based on maximizing the present worth of depreciation allowances, MACRS is preferred to SLN for recovery periods greater than 5 years.
The concept similar to depreciation that is applied to natural resources is called what?a. Depletionb. Declining balancec. Amortizationd. MACRS
Michelin is considering going ‘‘lights-out’’ in the mixing area of the business that operates 24/7. Currently, personnel with a loaded cost of \($600,000\) per year are used to manually weigh
True or False: Accelerated depreciation plans were adopted after World War II to stimulate capital investment.
An X-ray machine at a dental office is MACRS 5-year property. It costs \(\$ 6,000\) and has an expected useful life of 8 years. The salvage value at the end of 8 years is expected to be \(\$ 500\).
For each of the following assets, state whether the asset is tangible/intangible property, personal/real property, and depreciable/nondepreciable property.a. A melt-indexer used in a company research
Which of the following is not a requirement for an asset to be depreciable?a. It must have a life longer than 1 year.b. It must have a basis (initial purchase plus installation cost) greater than
For each of the following assets, state whether the asset is tangible/intangible property, personal/real property, and depreciable/nondepreciable property. (9.2)a. A cell phone towerb. A tractor
MACRS-GDS deductions are a combination of which other methods of depreciation?a. Sum-of-years'-digits and straight lineb. Sum-of-years'-digits and declining balancec. Double declining balance and 150
True or False: MACRS is equivalent to DDB, switching to SLN, with a mid-year convention.
At the beginning of the fiscal year, Remington purchased a mold for manufacturing powdered metal firearm parts for \($120,000.\) The estimated salvage value after 8 years is \($10,000.\) Suppose they
True or False: The most popular variation of MACRS is MACRS-ADS.
Production equipment used in the bottling of soft drinks (MACRS-GDS, 10-year property) is purchased and installed for \(\$ 630,000\). What is the depreciation deduction in the fourth year under
Determine the sinking fund depreciation allowance and the book value at the end of each year for a computerized truck tire balancer costing \($18,000\) and having a market value of \($2,000\) after a
True or False: Sum-of-Years'-Digits depreciation is a popular depreciation method and is most often used to compute income tax liabilities.
Which of the following is (are) required to calculate MACRS-GDS depreciation deductions? 1. Property class 2. Salvage value 3. First cost 4. Annual maintenance costsa. 1 and 3 onlyb. 2 and 3 onlyc.
Calculate the sinking fund depreciation allowance for a company-owned executive car having a cost basis of \($60,000.\) The company will keep it for 3 years, and it can be sold at \($25,000\) at that
True or False: When given a choice of depreciation methods to use, choose the one that maximizes the present worth of book value.
The depreciation deduction for year 11 of a 15-year property with a 20 -year class life is \(\$ 4,000\). If the asset's salvage value is estimated to be \(\$ 5,000\) and MACRS-GDS is used to
A small truck is purchased for \($17,000.\) It is expected to be of use to the company for 6 years, after which it will be sold for \($3,500.\) Determine the depreciation deduction and the resulting
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