Q1. ABC Company is studying a project that would have a five year life and require a $1,600,000 investmentin equipment. At the end of five years, the project would terminate and the equipment would have no value left over. The project would provide net income each year as follows: 2,800,000 300,000 2,500,000 Sales Less COGS Gross Margin Less: Operating Expenses Advertising, Salaries and other fixed Salary Expense Amortization Total Expenses 1,050,000 1,300,000 100,000 2,450,000 50,000 Net Income The company's discount rate is 18% 1) compute the net annual cash inflow from project 2) compute the net present value of the project. Is it acceptable? Q2 Baron Ltd makes a commercial cleaning compound known as Loomp. The direct materials and direct labour standards for one unit of Loomp follow Standard Quantity or Standard Price or Standard Cost Rate hours Direct materials 2.1 Kg $5.50 per kg $11.55 Direct Labour 0.2 hour 12.00 per hour 2.400 During the most recent month, the following activity was recorded a. 9,000 kg of materials were purchased at a cost of $5.20 per kg b. All of the material purchased was used to produce 4,000 units of Loomp c. A total of 750 hours of direct labour time was recorded at a total labour cost of $10,425 Required: 1. Compute the direct materials price and quantity variances for the month 2. Compute the direct labour rate and efficiency variances for the month Cost indentification Mr. John Black began his pottery manufacturing business serveral years ago The following costs occurred during 2016, please use the cost classification method to put them in to 1) As the business owner, John's saory S5000 per month 2) Workshop Building rent, $2800 per month 3) Clay and glare $2 per pottery 4/Wages of production worker. $12/pottery 5) Advertising, S800 per month 6) Sales commission, $10/pottery 7) Rent of production equipment, $300 /month 8) Amortization of office copier machine $500 9) Rent of sales office $500 per month 10) Phone for taking orders 500 per month 11) Interest lost on savings account, 51200 per year