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Oceanview Manufacturing is considering an investment that would require an initial net investment of $625,000. The following revenues/expenses relate exclusively to the investment: Sales $360,000
| Oceanview Manufacturing is considering an investment that would require an initial net |
| investment of $625,000. The following revenues/expenses relate exclusively to the investment: |
| Sales $360,000 |
| Variable expenses $30,000 |
| Contribution margin $330,000 |
| Fixed expenses |
| Salaries expense $24,000 |
| Rent expense $50,000 |
| Depreciation expense $50,000 |
| Total fixed expenses $124,000 |
| Operating income $206,000 |
| The investment will have a residual value of $40,000 at the end of its 18 year useful life. |
| The payback period for this investment is _______? If the desired payback is 3 years would they |
| accept or reject this investment? |
| A) 2.70 years and accept. |
| B) 1.92 years and reject |
| C) 3.35 years and reject |
| D) 2.18 years and accept |
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ACCOUNTING JOB QUESTIONS AND ANSWERS Trainee Accountants Handbook
Authors: Sterling Libs FCCA
1st Edition
1911037129, 978-1911037125
