Rochester Shoe and Boot Shop plans to produce the following quantity of waterproof boots during the first four months of 200X:

Units

January 1,300

February 2,300

March 500

April 200

Each unit requires 6 feet of materials. At the beginning of January, they had 1,950 feet of materials on hand, and plans to maintain an ending inventory of materials equal to 25% of next months production needs. Each foot of materials is expected to cost $5.

Determine the direct materials to be purchased in February:

		7,250 feet
		1,725 feet
		8,625 feet
		11,100 feet

Rochester Shoe and Boot Shop plans to produce the following quantity of waterproof boots during the first four months of 200X:

Units

January 1,300

February 2,300

March 500

April 200

Each unit requires 6 feet of materials. At the beginning of January, they had 1,950 feet of materials on hand, and plans to maintain an ending inventory of materials equal to 25% of next months production needs. Each foot of materials is expected to cost $5.

Determine the direct materials to be purchased in March:

		2,450 feet
		2,550 feet
		650 feet
		3,250 feet

Sunset Inc. is trying to determine if they should invest in a new machine that would be more efficient and would general an annual profit of $100,000 (after tax).

The following estimates are available:

Initial cost $279,800

Cost of capital 12%

Estimated life 4 years

Estimated residual value $ 0

Determine the net present value of the new machine (nearest answer if using a financial calculator or Excel).

		$24,310
		$23,930
		$19,509
		$(36,816)