Trecroci Corporation applies manufacturing overhead to products on the basis of

Question

Trecroci Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company bases its predetermined overhead rate on 2,500 machine-hours. The company's total budgeted fixed manufacturing overhead is $5,750. In the most recent month, the total actual fixed manufacturing overhead was $6,030. The company actually worked 2,600 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 2,490 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?

a. $230 favorable

b. 280 unfavorable

c. 23 unfavorable

d. 230 unfavorable

Seroka Corporation estimates that its variable manufacturing overhead is $6.90 per machine-hour and its fixed manufacturing overhead is $745,290 per period.

If the denominator level of activity is 9,000 machine-hours, the fixed element in the predetermined overhead rate would be

a. 6.90

b. 89.71

c. 690.00

d. 82.81

(Ignore income taxes in this problem.) Tu Corporation is investigating automating a process by purchasing a machine for $423,000 that would have a 9 year useful life and no salvage value. By automating the process, the company would save $112,000 per year in cash operating costs. The new machine would replace some old equipment that would be sold for scrap now, yielding $27,000. The annual depreciation on the new machine would be $47,000. The simple rate of return on the investment is closest to

a. 15.4%

b. 16.4%

c. 26.5

d. 11.1%

(Ignore income taxes in this problem.) Meharg Corporation is considering the purchase of a machine that would cost $120,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $25,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $30,000. The company requires a minimum pretax return of 10% on all investment projects.

The net present value of the proposed project is closest to:

a. $14,905

b. $-6,270

c. $9,255

d. $18,730

(Ignore income taxes in this problem.) A piece of new equipment will cost $70,000. The equipment will provide a cost savings of $15,000 per year for ten years, after which it will have a $3,000 salvage value. If the required rate of return is 14%, the equipment's net present value is:

a. $8,240

b. $-8240

c. 23,888

d. 9,050

Explanation / Answer

4.

NPV = -120000+ 30000*pvifa(10,5)+(25000/1.1^5)

NPV = -120000+ 30000*3.79+(25000/1.1^5) = 9255

ans = C

5.

NPV = -70000+15000*5.21+3000/1.14^10

NPV = 9050

ans =D

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