Financial Management (1,15)

ANSWER ALL QUESTIONS.

Numerical questions must be answered with TWO DECIMAL POINTS.

Mak Jenny Mak Jenny plans to introduce a new line of pickled fruits, Buah Pickeled, estimated sales of 50,000 units per year. It will be sold for RM22.00 to its agents, and cost of production is RM12.50 each.

The company currently produces 2 other products which are Sambal Podeh and Beef Salai. Details of the current sales are as follows:

Unit Sales Selling Price Production cost Sambal Podeh 120,000.00 RM 13.00 RM 9.20 Beef Salai 65,000.00 RM 21.00 RM 14.50 The introduction of Buah Pickled is estimated to cause a drop of 20% on the sales of existing products.

Net contribution margin per unit for Sambal Podeh is RM________.

Total Contribution margin for the current products are RM___________.

Estimated sales for Beef Salai after the introduction of the new product is __________ units.

Erosion cost for the existing products are estimated to be RM_____________.

Net contribution margin for Buah Pickled is RM_______.

Total contribution margin with the new product is RM__________.

The company should not introduce the new product. True False

The projected revenues and costs that form the basis of the potential for a project's acceptance or rejection are estimates of ________ activity.

ANSWER: future

future past known current

________ of a project are those that have already been incurred and cannot be reversed.

ANSWER: Sunk cost

Erosion cost Sunk cost Opportunity cost Working capital cost

________ involve(s) a cash flow that never occurs, but we need to add it as a cost or outflow of a new project.

ANSWER: Opportunity costs

Cost recovery of divested assets Capital expenditures Sunk costs Opportunity costs

________ costs each year do not reflect cash flow because the actual purchase and installation (outflow of dollars) of the asset have already taken place.

ANSWER: Depreciation

Depreciation Sunk Opportunity Working capital

MACRS allocates the same amount of cost each period as determined by the total initial cost divided by the number of years of useful life of the machines.

ANSWER: False

True False

When a depreciable asset is sold, a tax gain or tax loss on disposal is calculated, based on the ________ of the asset at the time of disposal.

ANSWER: difference in book and market values

book value only market value only difference in book and market values difference in market value and salvage value

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