Chap 22/24 - Short Questions

*Please, if you're not able to answer each question, please do not answer any question. Thank you*

1) a) What is the present value of a single amount of $25,000 due 9 years from now, discounted at 10%.

(b) What is the present value of a series of $25,000 payments, to be received at the end of each of 6 years, discounted at 9%?

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2) Leno Company makes swimsuits and sells these suits directly to retailers. Although Leno has a variety of suits, it does not make the All-Body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicates that the All-Body suit would sell for approximately $105. Given its experience, Leno believes the All-Body suit would have the following manufacturing costs.

Assume that Leno uses target costing. What is the price that Leno would charge the retailer for the All-Body swimsuit?

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3) Second Chance Welding rebuilds spot welders for manufacturers. The following budgeted cost data for 2017 is available for Second Chance.

The company desires a $38.00 profit margin per hour of labor and a 24.00% profit margin on parts. It has budgeted for 7,900 hours of repair time in the coming year, and estimates that the total invoice cost of parts and materials in 2017 will be $418,000.

Compute the rate charged per hour of labor. (Round answer to 2 decimal places, e.g. 10.50.)

Labor Rate Per Hour $______

4) Rap Corporation produces outdoor portable fireplace units. The following per unit cost information is available: direct materials $25, direct labor $28, variable manufacturing overhead $19, fixed manufacturing overhead $21, variable selling and administrative expenses $14, and fixed selling and administrative expenses $13. The company's ROI per unit is $17.

Compute Rap Corporations markup percentage using variable-cost pricing. (Round answer to 2 decimal places, e.g. 10.50.)

Variable-cost pricing markup percentage = ?

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6) Appliance Possible Inc. (AP) is a manufacturer of toaster ovens. To improve control over operations, the president of AP wants to begin using a flexible budgeting system, rather than use only the current master budget. The following data are available for APs expected costs at production levels of 80,000, 95,000, and 110,000 units.

If AP sells the toaster ovens for $16 each, how many units will it have to sell to make a profit of $330,500 before taxes?

Units to be sold ________

$25 Direct materials Direct labor Manufacturing overhead Total costs **** 48 $103 Time Charges $260,700 Material Loading Charges Technicians' wages and benefits Parts manager's salary and benefits Office employee's salary and benefits Other overhead Total budgeted costs 55,300 15,800 $331,800 $40,300 10,729 29,260 $80,289 For its three investment centers, Gerrard Company accumulates the following data: Sales Controllable margin Average operating assets $1,960,000 1,225,500 4,902,000 II $4,027,000 2,186,190 8,097,000 III $4,035,000 3,765,260 12,146,000 The centers expect the following changes in the next year: (I) increase sales 20%; (II) decrease costs $439,000; (III) decrease average operating assets $460,000. Compute the expected return on investment (ROI) for each center. Assume center I has a controllable margin percentage of 76%. (Round ROI to 1 decimal place, e.g. 1.5.) III The expected return on investment 23.2 38.5 % 32.2% Variable costs Manufacturing Administrative Selling Fixed costs Manufacturing Administrative $6 per unit $3 per unit $2 per unit $139,000 $79,000