1) Sangeeta Industries is considering replacing an aging Evaporator that is presently used in its production process. The following information is available:

	Old Evaporator	Replacement Machine
Original cost	$55,000	$45,000
Remaining useful life in years	3	3
Current age in years	3	0
Book value	$33,000
Current disposal value in cash	$9,000
Future disposal value in cash (in 5 years)	$0	$0
Annual cash operating costs	8,500	$3,500

Sunk costs would amount to

A) $55,000

B) $33,000

C) $9,000

D) $45,000

2) Vatsala Company discloses its financial information as follows:

Income from operations	$200,000
Interest expense	45,000
Gains/(losses) on sale of equipment	(2,500)
Net income	152,500
Beginning assets	2,600,000
Ending assets	3,200,000

Calculate return on investment based on the above information.

A) 6.3%

B) 5.3%

C) 6.9%

D) 7.2%

3) Venkat Inc. manufactures and sells pens for $5 each. Inez Corp. has offered Venkat Inc. $3 per pen for a one-time order of 3,500 pens. The total manufacturing cost per pen, using traditional costing, is $1 per unit, and consists of variable costs of $0.85 per pen and fixed overhead costs of $0.15 per watch. Assume that Venkat Inc. has excess capacity and that the special order would not adversely affect regular sales. What is the change in operating income that would result from accepting the special sales order?

A) increase of $7,000

B) decrease of $7,000

C) increase of $7,525

D) decrease of $7,525

4) Mikhail Building Supplies Co. has a sales office which sells steel beams to property developers. It discloses its financial information as follows.

Revenue Center Performance Report
	Actual	Flexible Budget		Flexible	Sales Volume		Static
Product Type:	Sales Revenue	Variance	U/F	Budget	Variance	U/F	Budget
40 inch	$31.500			$30,000			$40,000
36 inch long	$40,150			$42,000			$33,000
36 inch short	$36,200			$33,000			$30,000
32 inch	$19,000			$20,000			$28,000

Calculate the flexible budget variance for the steel beams?

A) $1,850 U

B) $3,000 F

C) $10,000 U

D) $1,500 F