QUESTION 1:

Carr Company is considering two capital investment proposals. Estimates regarding each project are provided below:

	Project Soup		Project Nuts
Initial investment	$400,000		$600,000
Annual net income	30,000		46,000
Net annual cash inflow	110,000		146,000
Estimated useful life	5 years		6 years
Salvage value	-0-		-0-

The company requires a 10% rate of return on all new investments.

	Present Value of an Annuity of 1
Periods		9%		10%		11%		12%
5		3.890		3.791		3.696		3.605
6		4.486		4.355		4.231		4.111

The cash payback period for Project Soup is

QUESTION 2:

Clark Company manufactures a product with a standard direct labor cost of two hours at $18.00 per hour. During July, 2,000 units were produced using 4,200 hours at $18.30 per hour. The labor price variance was

QUESTION 3:

A company is considering purchasing factory equipment that costs $480,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the equipment is purchased, annual revenues are expected to be $135,000 and annual operating expenses exclusive of depreciation expense are expected to be $39,000. The straight-line method of depreciation would be used. The cash payback period on the equipment is