QUESTION 11 The management of Consumers Mfg would like to purchase a specialized production machine for $95,000 The machine is expected to last three years, with a salvage value of $5,000 Annual maintenance costs will total $12,000, and annual labor and material savings are predicted to be $55,000 The company's required rate of return in 15 Find the NPV of this investment $5,623 $2,811 $6,466 $1,406 QUESTION 12 The Montana Consulting is evaluating the profitability of their two clients, X and Y Total fixed costs are allocated evenly between customer X and Y, and will remain the same whether they add or drop clients Should The Montana Consulting drop client Y The profit loss for each customer is shown below Should client Y be dropped X Y Revenue $410,000 $230,000 Variable costs $184,500 $163,500 Contribution margin $225,500 $66,500 Allocated fixed costs $80,000 $80,000 Customer profit (loss) $145,500 ($13,500) Yes, because any customer showing a loss should be dropped Yes, profit will increase if Client Y is dropped Yes, because their revenues are much lower than Client X No, profit will decrease if Client Y is dropped QUESTION 13 Hawk, Inc has a 15 required rate of return Three divisions of Hawk have proposed three projects to increase income over the next 12 years Three divisions report different measures as follows Project A was reported to have an NPV of $530 Project B was reported with an internal rate of return of 12 Project C was reported to have a payback period of 15 years With which of these projects should Hawk move forward Project B Project C All three sound great Project A QUESTION 22 Jane's Juices, which makes smoothies on university campuses across Michigan, is making an annual budget for this coming financial year Last year, 26,000 units were sold, and sales are expected to increase 20 next year, and the sales price is expected to remain at $8 each Finished goods inventory at the end of the year was 1125 units, and management likes to have enough inventory at the end of the year for 2 of next year's sales What is the sales budget (in dollars) for next year $208,000 $249,600 $260,400 $238,800

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QUESTION 11 The management of Consumers Mfg. would like to purchase a specialized production machine for $95,000. The machine is expected to last three years,

QUESTION 11

The management of Consumers Mfg. would like to purchase a specialized production machine for $95,000. The machine is expected to last three years, with a salvage value of $5,000. Annual maintenance costs will total $12,000, and annual labor and material savings are predicted to be $55,000. The company's required rate of return in 15%. Find the NPV of this investment.

$5,623

$2,811

$6,466

$1,406

QUESTION 12

The Montana Consulting is evaluating the profitability of their two clients, X and Y. Total fixed costs are allocated evenly between customer X and Y, and will remain the same whether they add or drop clients. Should The Montana Consulting drop client Y? The profit/loss for each customer is shown below. Should client Y be dropped?

	X	Y
Revenue	$410,000	$230,000
Variable costs	$184,500	$163,500
Contribution margin	$225,500	$66,500
Allocated fixed costs	$80,000	$80,000
Customer profit (loss)	$145,500	($13,500)

		Yes, because any customer showing a loss should be dropped.
		Yes, profit will increase if Client Y is dropped.
		Yes, because their revenues are much lower than Client X .
		No, profit will decrease if Client Y is dropped.

QUESTION 13

Hawk, Inc. has a 15% required rate of return. Three divisions of Hawk have proposed three projects to increase income over the next 12 years. Three divisions report different measures as follows: Project A was reported to have an NPV of $530. Project B was reported with an internal rate of return of 12%. Project C was reported to have a payback period of 15 years. With which of these projects should Hawk move forward?

Project B

Project C

All three sound great!

Project A

QUESTION 22

Jane's Juices, which makes smoothies on university campuses across Michigan, is making an annual budget for this coming financial year. Last year, 26,000 units were sold, and sales are expected to increase 20% next year, and the sales price is expected to remain at $8 each. Finished goods inventory at the end of the year was 1125 units, and management likes to have enough inventory at the end of the year for 2% of next year's sales. What is the sales budget (in dollars) for next year?

$208,000

$249,600

$260,400

$238,800