SECTION B

You are required to read each statement carefully and present your agreement or disagreement with the statement. You must support your answer with logical answers. Your answer should not exceed three statements for each statement.

1. Why are discounted cash flow methods of making capital budgeting decisions superior to other methods?
2. Parker Company had $5,000,000 in sales and reported a $300,000 loss in its annual report to stockholders. According to a CVP analysis prepared for managements use, $5,000,000 in sales is the break-even point for the company. Did the companys inventory level increase, decrease, or remain unchanged? Explain
3. Cost-volume-profit (CVP) analysis is based entirely on unit costs. Do you agree? Explain.
4. E Company has forecast sales to be $225,000 in February, $235,000 in March, $250,000 in April, and $240,000 in May. All sales are made on credit and sales are collected 60% in the month of sale, and 40% the month following. What is the budgeted Accounts Receivable balance on May 31?