A college uses advisors who work with all students in all divisions of the college. The most useful allocation basis for the salaries of these employees would likely be Multiple Choice number of classes offered in each division student graduation rate O square footage of each division number of students advised from each division An opportunity cost Multiple Choice O is on unavoidable cost because it remains the same regardless of the alternative chosen Requires a current outlay of cath Results from post managerial decisions Is the potential benefit lost by choosing a specific alternative course of action among two or more is irrelevant in decision making because it occurred in the past A company paid $200,000 ten years ago for a specialized machine that has no salvage value and is being depreciated at the rate of $10,000 per year. The company is considering using the machine in a new project that will have incremental revenues of $28,000 per year and annual cash expenses of $20,000. In analyzing the new project, the $200,000 original cost of the machine is an example of an) Multiple Choice Incremental cost Opportunity cost O Variable cost Sunk cost Janko Wellspring Inc has a pump with a book value of $33,000 and a 4-year remaining life. A new, more efficient pump, is available at a cost of $54,000. Janko can also receive $8,900 for trading in the old pump. The new pump will reduce variable costs by $11.800 per year over its four-year life. Should the pump be replaced? Multiple Choice Yes, because income will increase by $2,100 in total Yes, because income will increase by 2,100 per year. No, because the company will be $2.100 worse off in total No, because income will decrease by $11.800 per year Ultimo Co operates three production departments as profit centers. The following information is available for its most recent year. Department 1's contribution to overhead as a percent of sales is Dept. Sales 1 $1,040,000 2 440,000 3 740,000 Cost of Goods Sold $704,000 154,000 304,000 Direct Expenses $128,000 44,000 154,000 Indirect Expenses ) $ 84,000 104,000 24,000 Multiple Choice 54.7% 20.0% 37.8% Granfield Company has a plece of manufacturing equipment with a book value of $44,000 and a remaining useful life of four years. At the end of the four years the equipment will have a zero salvage value. The market value of the equipment is currently $22,800. Granneld can purchase a new machine for $128,000 and receive $22,800 in return for trading in its old machine. The new machine will reduce variable manufacturing costs by $19,800 per year over the four-year life of the new machine. The total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is: Multiple Choice $26.000 increase $79,200 decrease 521200 decrease 554 800 increase Sooky has a spotter truck with a book value of $45,000 and a remaining useful life of 5 years. At the end of the five years the spotter truck will have a zero salvage value. The market value of the spotter truck is currently $34,500. Sooky can purchase a new spotter truck for $125,000 and receive $31,500 in return for trading in its old spotter truck. The new spotter truck will reduce variable manufacturing costs by $25,500 per year over the five-year life of the new spotter truck. The total increase or decrease in income by replacing the current spotter truck with the new truck (Ignoring the time value of money) is Multiple Choice 531,500 decrease $31.500 increase $34.000 decrease $125,000 decrease Poe Company is considering the purchase of new equipment costing $83,000. The projected annual cash inflows are $33,200, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of $1 and present value of an annuity of $1 for different periods is presented below. Compute the net present value of the machine Periods 1 2 3 Presont Value of $1 at 10 0.9091 0.8264 0.7513 0.6830 Present Value of an Annuity of si at 10.6 0.9091 1.7355 2.4869 3.1699 4 Multiple Choice $(10,329) $39,465 Dartford Company reported the following financial data for one of its divisions for the year, average investment center total assets of $3,700,000; investment center income $640,000; a target Income of 12% of average Invested assets. The residual income for the division is: Multiple Choice $563,200 $1,084,000 $196,000 $716,800 Vextra Corporation is considering the purchase of new equipment costing $39,500. The projected annual cash inflow is $11,900, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value Vextra requires a 12% return on its investments. The present value of an annulty of $1 for different periods follows: Periods 1 a 125 0.8929 1.6901 2.4018 3.0373 3 4 Compute the net present value of this Investment Multiple Choice S(36,144) ${4.000) The following present value factors are provided for use in this problem Periods 1 2 3 4 Present Value of $1 at 8 0.9259 0.8573 0.7938 0.7350 Present Value of an Annuity of $1 at 84 0.9259 1.7833 2.5771 3.3121 Xavier Co wants to purchase a machine for $37,400 with a four year life and a $1,100 salvage value Xavler requires an 8% return on investment. The expected year-end net cash flows are $12,400 in each of the four years. What is the machine's net present value? Multiple Choice $4,479 53,670