A company produces 200 microwave ovens per month, each of which includes one electrical circuit. The company currently manufactures the circuits in-house but is considering outsourcing the circuits at a contract cost of $28 each. Currently, the cost of producing circuits in-house includes variable costs of $24 per circuit and fixed costs of $5,000 per month. Assume the company could eliminate all fixed costs by outsourcing and that there is no alternative use for the facilities presently being used to make circuits. If the company outsources, operating income will O A. increase by $800 O B. increase by $4,200 O C. decrease by $5,600 OD. decrease by $800 A company is evaluating three possible investments. Each uses the straight line method of depreciation. The following information is provided by the company: Project A Project B Project C Investment $238.000 $50,000 $238.000 Residual value 0 16,000 36.000 Net cash inflows: Year 1 54,000 26,000 98,000 Year 2 54,000 17,000 68,000 Year 3 54.000 13,000 78,000 Year 4 54,000 10,000 38,000 Year 5 54,000 What is the accounting rate of return for Project C? (Round your answer to two decimal places) O A. 15.97% OB. 12.61% OC. 20.00% OD. 14.60% Thom Corporation is considering an investment opportunity with the following expected net cash inflows: Year 1 5230,000 Year 2. $370,000 Year 3. $360,000. The company uses a discount rate of 13%, and the initial cost of the investment is $720,000 10% Present Value of $1: 11% 1 09090901 2 0826 0 812 3 0 751 0.731 4 0.083 0659 5 0621 0.593 12% 0.893 0.797 0.712 0.636 0.567 13% 14% 15% 0 8850 877 0.870 0.783 0.7690 756 0.093 0.675 0.058 0.613 0.592 0.572 0.543 0.519 0.497 The IRR of the project will be O A. between 10% and 15% OB. less than 13% OC. between 13% and 14% OD more than 13% Drauley musties IS CONSIuering replacing a Machule uldt is presenly use in its producun process. Which of the following is irrelevant to the replacement decision? Replacement Old Machine Machine Original cost $60,000 $46,000 Remaining useful life in years Current age in years Book value $33,000 Current disposal value in cash $9,000 Future disposal value in cash (in 5 years) $0 Annual cash operating costs $7,000 $4,000 Which of the information provided in the table is irrelevant to the replacement decision? $0 O A. the original cost of the old machine OB. the annual cash operating costs for both machines O c. the sales price of the new machine OD. the current disposal value of the old machine Culinary Enterprises manufactures cookware sets and sells the sets to department stores. Culinary expects to sell 2,600 cookware sets for $220 each in April and 3,000 cookware sets for $235 each in May Sales are 25% cash and 75% on account. Compute the total budgeted sales for May O A. $572,000 O B. $705,000 OC. $176,250 OD. $528,750 Kuzma Foods, Inc. has budgeted sales for June and July at $690.000 and $720,000, respectively. Sales are 90% credit, of which 70% is collected in the month of sale and 30% is collected in the following month. What is the budgeted Accounts Receivable balance on July 31? O A $216,000 OB. $186,300 OC. $648,000 OD 5194,400 A company has two different products that are sold in different markets. Financial data are as follows: Product A Product B Total Revenue $16.000 $9.300 $25,300 Variable cost (7,000) (9.800) (16,800) Fixed cost (allocated) (2.000) (2.000) (4.000) Operating income (loss) $7,000 $12.500) $4,500 Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other. If Product Bis dropped, what would be the impact on total operating income of the company? O A. decreases by $2,000 OB. increases by $2,000 OC. decreases by $500 OD. increases by $500 Fowler Company is a price-taker and uses target pricing Refer to the following information Production volume 600,000 units per year Market price $30 per unit Desired operating income 17% of total assets Total assets $13,800,000 Variable cost per unit $17 per unit Fixed cost per year $5,500,000 per year With the current cost structure, Fowler cannot achieve its profit goals. It will have to reduce either the faced costs or the variable costs. Assuming that variable costs cannot be reduced, what are the target fixed costs per year? Assume all units produced are sold O'A. $5,500,000 O B. $5,454,000 OC. $10,200,000 OD. $12,500,000 Tidy Turf, Inc. provides housekeeping services. The following financial data have been provided Service Revenue Cleaning Supplies Used Wages Expense Office Rent Expense Depreciation Expense Machinery $70,000 22,500 20,350 5,350 550 Calculate the contribution margin and the contribution margin ratio (Round your contribution margin to the nearest dollar, and your contribution margin ratio to two decimal places) O A. $27,150, 38.79% O'B. $21,250, 30,38% O C. $64,650, 92.36% OD. $49,650; 70.93% Links Golf Course is planning for the coming golfing season Investors would like to earn a 15% return on the company's 500,000,000 of assets. The company primarily incurs feed costs to groom the greens and fairways. Foed costs are projected to be $30,000,000 for the season About 600.000 rounds of golf are expected to be played each year. Variable costs are about $15 per round of golf. Links Golf Course is a price-taker and will not be able to charge more than its competitors, who charge 377 per round of golf. Compute the operating profit that will be earned O A. $7.200.000 OB. $46,200,000 OC. $85,200,000 OD 50,000,000 A company produces 200 microwave ovens per month, each of which includes one electrical circuit. The company currently manufactures the circuits in-house but is considering outsourcing the circuits at a contract cost of $28 each. Currently, the cost of producing circuits in-house includes variable costs of $24 per circuit and fixed costs of $5,000 per month. Assume the company could eliminate all fixed costs by outsourcing and that there is no alternative use for the facilities presently being used to make circuits. If the company outsources, operating income will O A. increase by $800 O B. increase by $4,200 O C. decrease by $5,600 OD. decrease by $800 A company is evaluating three possible investments. Each uses the straight line method of depreciation. The following information is provided by the company: Project A Project B Project C Investment $238.000 $50,000 $238.000 Residual value 0 16,000 36.000 Net cash inflows: Year 1 54,000 26,000 98,000 Year 2 54,000 17,000 68,000 Year 3 54.000 13,000 78,000 Year 4 54,000 10,000 38,000 Year 5 54,000 What is the accounting rate of return for Project C? (Round your answer to two decimal places) O A. 15.97% OB. 12.61% OC. 20.00% OD. 14.60% Thom Corporation is considering an investment opportunity with the following expected net cash inflows: Year 1 5230,000 Year 2. $370,000 Year 3. $360,000. The company uses a discount rate of 13%, and the initial cost of the investment is $720,000 10% Present Value of $1: 11% 1 09090901 2 0826 0 812 3 0 751 0.731 4 0.083 0659 5 0621 0.593 12% 0.893 0.797 0.712 0.636 0.567 13% 14% 15% 0 8850 877 0.870 0.783 0.7690 756 0.093 0.675 0.058 0.613 0.592 0.572 0.543 0.519 0.497 The IRR of the project will be O A. between 10% and 15% OB. less than 13% OC. between 13% and 14% OD more than 13% Drauley musties IS CONSIuering replacing a Machule uldt is presenly use in its producun process. Which of the following is irrelevant to the replacement decision? Replacement Old Machine Machine Original cost $60,000 $46,000 Remaining useful life in years Current age in years Book value $33,000 Current disposal value in cash $9,000 Future disposal value in cash (in 5 years) $0 Annual cash operating costs $7,000 $4,000 Which of the information provided in the table is irrelevant to the replacement decision? $0 O A. the original cost of the old machine OB. the annual cash operating costs for both machines O c. the sales price of the new machine OD. the current disposal value of the old machine Culinary Enterprises manufactures cookware sets and sells the sets to department stores. Culinary expects to sell 2,600 cookware sets for $220 each in April and 3,000 cookware sets for $235 each in May Sales are 25% cash and 75% on account. Compute the total budgeted sales for May O A. $572,000 O B. $705,000 OC. $176,250 OD. $528,750 Kuzma Foods, Inc. has budgeted sales for June and July at $690.000 and $720,000, respectively. Sales are 90% credit, of which 70% is collected in the month of sale and 30% is collected in the following month. What is the budgeted Accounts Receivable balance on July 31? O A $216,000 OB. $186,300 OC. $648,000 OD 5194,400 A company has two different products that are sold in different markets. Financial data are as follows: Product A Product B Total Revenue $16.000 $9.300 $25,300 Variable cost (7,000) (9.800) (16,800) Fixed cost (allocated) (2.000) (2.000) (4.000) Operating income (loss) $7,000 $12.500) $4,500 Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other. If Product Bis dropped, what would be the impact on total operating income of the company? O A. decreases by $2,000 OB. increases by $2,000 OC. decreases by $500 OD. increases by $500 Fowler Company is a price-taker and uses target pricing Refer to the following information Production volume 600,000 units per year Market price $30 per unit Desired operating income 17% of total assets Total assets $13,800,000 Variable cost per unit $17 per unit Fixed cost per year $5,500,000 per year With the current cost structure, Fowler cannot achieve its profit goals. It will have to reduce either the faced costs or the variable costs. Assuming that variable costs cannot be reduced, what are the target fixed costs per year? Assume all units produced are sold O'A. $5,500,000 O B. $5,454,000 OC. $10,200,000 OD. $12,500,000 Tidy Turf, Inc. provides housekeeping services. The following financial data have been provided Service Revenue Cleaning Supplies Used Wages Expense Office Rent Expense Depreciation Expense Machinery $70,000 22,500 20,350 5,350 550 Calculate the contribution margin and the contribution margin ratio (Round your contribution margin to the nearest dollar, and your contribution margin ratio to two decimal places) O A. $27,150, 38.79% O'B. $21,250, 30,38% O C. $64,650, 92.36% OD. $49,650; 70.93% Links Golf Course is planning for the coming golfing season Investors would like to earn a 15% return on the company's 500,000,000 of assets. The company primarily incurs feed costs to groom the greens and fairways. Foed costs are projected to be $30,000,000 for the season About 600.000 rounds of golf are expected to be played each year. Variable costs are about $15 per round of golf. Links Golf Course is a price-taker and will not be able to charge more than its competitors, who charge 377 per round of golf. Compute the operating profit that will be earned O A. $7.200.000 OB. $46,200,000 OC. $85,200,000 OD 50,000,000