for 15,000 units of product at Industries received an offer from an exporter 14.
ID: 2572598 • Letter: F
Question
for 15,000 units of product at Industries received an offer from an exporter 14. Stryker $17.50 per unit. The acceptance of the offer will domestic sales prices. The following data is available: $20 Domestic unit sales price Unit manufacturing costs: Variable Fixed What is the amount of differential income or loss from acceptance of the offer? a. $97,500 income b. $94,500 loss c. $37,500 income d. $37,500 loss 15. Which of the following short-run decisions are made using the concept of differential analysis? a. Buy or make b. Special order c. Drop or delete a segment or division d. All the above 16. An anticipated purchase of equipment for $580,000 with a useful life of 8 years and no residual value is expected to yield the following annual net incomes and net cash flows: Year Net Income Net Cash Flow 1 $60,000 $110,000 2 50,000 100,000 3 50,000 100,000 4 40,000 90,000 5 40,000 90,000 6 40,000 90,000 7 40,000 90,000 8 40,000 90,000 What is the cash payback period? a. 5 years b. 4 years c. 6 years d. 3 years 17, The expected average rate of return for a proposed investment of $ fixed asset, with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total net income of $240,000 for the 4 years, is 650,000 in aExplanation / Answer
14. Relavent costs = Variable manufacturing costs
Amount of differential income = (selling price for the offer - variable manufacturing costs) * no of units
= (17.5 - 11) * 15,000
= 97,500 income.
The answer is A.
15. Short run decisions are made using the concept of differential analysis are
Special orders, Make or buy, Sell or process further, Drop or delete a segment or division, Maximize contribution per unit of the loimiting factor.
The answer is D.
16. Cash payback period = Number of years needed to recoup the initial investment.
Cash pay back period = 6 years
The answer is C.
17. Average rate of return = (Total net income / Number of years) / Investment
= (240,000 / 4) / 650,000
= 9.23%.
Year Net cash flow Cumulative net cash flow 0 (580,000) (580,000) 1 110,000 (470,000) 2 100,000 (370,000) 3 100,000 (270,000) 4 90,000 (180,000) 5 90,000 (90,000) 6 90,000 0 7 90,000 90,000 8 90,000 180,000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.