1.On January 1, 2016 Crane Company will acquire a new asset that costs $400,000 and that is anticipated to have a salvage value of $30,000 at the end of four years. The new asset: qualifies as three-year property under the Modified Accelerated Cost Recovery System (MACRS) will replace an old asset that currently has a tax basis of $80,000 and that can be sold on this date for $60,000 will continue to generate the same operating revenues as the old asset ($200,000 per year). However, it is predicted that savings in cash operating costs will be experienced as follows: a total of $120,000 in each of the first three years, and $90,000 in the fourth year. Crane is subject to a combined income tax rate of 40% and rounds all computations to the nearest dollar. Crane's fiscal year coincides with the calendar year. Assume that any gain or loss affects the taxes paid at the end of the year in which the gain or loss occurs. The company uses the net present value (NPV) method to analyze projects using the factors and rates presented below (based on a discount rate of 14%):

Period	PV of $1 at 14%	PV of $1 Annuity at 14%	MACRS
1	0.88	0.88	33%
2	0.77	1.65	45
3	0.68	2.33	15
4	0.59	2.92	7

The relevant discounted operating cash flows (cost savings) that should be factored into Crane Company's analysis are:

Select one:

a. $133,080

b. $150,780

c. $199,620

d. $206,640

e. $550,020

2.Machine Builders Inc. adopted a standard cost system several years ago that it uses in conjunction with its process cost system. The per-unit standard costs for direct materials and direct labor for its single product are as follows:

Materials:	(4 kilograms $10.00 per kilogram)	$40.00
Labor:	(4 hours $18.00 per hour)	72.00

All materials are issued at the beginning of processing. The operating data shown below were taken from the records for July:

In-process beginning inventory	none
In-process ending inventory90% complete as to labor	1,000 units
Units completed during the month	7,200 units
Budgeted output	8,000 units
Purchases of materials, in kilograms (AQ)	30,000
Total actual labor costs incurred	$525,000
Direct labor hours worked (AQ)	28,000 hours
Materials purchase-price variance	$3,000 unfavorable
Increase in materials inventory in July	1,500 kilograms
Beginning inventory of materials	0 kg.

The actual total cost of direct materials used in production during July was:

Select one:

a. $282,150

b. $287,850

c. $297,000

d. $300,000

e. $303,000