EX 10-4 Out of Eden, Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 9,000 units at $42 each. The new manufacturing equipment will cost $156,000 and is expected to have a 10-year life and $12,000 residual value. Selling expenses related to the new product are expected to be 5% of sales revenues. The cost to manufacture the product includes the following on a per-unit basis:
Direct labor $7.00
Direct materials 23.40
Fixed factory overhead-depreciation 1.60
Variable factory overhead 3.60
Total $35.60
Determine the net cash flows for the first year of the project, Years 2-9 and for the last year of the project.
Click here for the solution: Out of Eden, Inc. is planning to invest in new manufacturing equipment to make a new garden tool
Showing posts with label invest. Show all posts
Showing posts with label invest. Show all posts
Sunday, September 27, 2015
Thursday, August 13, 2015
Corporations invest in other companies for all of the following reasons except to
1) Corporations invest in other companies for all of the following reasons except to
2) A typical investment to house excess cash until needed is
3) Pension funds and mutual funds regularly invest in debt and stock securities to
4) On January 1, 2008, Turner Company purchased at face value, a $1,000, 7% bond that pays interest on January 1 and July 1. Turner Company has a calendar year end.
The entry for the receipt of interest on July 1, 2008, is
5) If a short-term debt investment is sold, the Investment account is
6) Steven Co. purchased 30, 6% Johnston Company bonds for $30,000 cash plus brokerage fees of $300. Interest is payable semiannually on July 1 and January 1. The entry to record the December 31 interest accrual would include a
7) If an investor owns less than 20% of the common stock of another corporation as a long-term investment,
8) If the equity method is being used, cash dividends received
9) If one company owns more than 50% of the common stock of another company,
10) The contra-account, Market Adjustment, is also called a(n)
11) The balance in the Unrealized Loss—Equity account will
12) If the cost of an available-for-sale security exceeds its fair value by $40,000, the entry to recognize the loss
13) Which of the following is a major difference when accounting for long-term debt investments versus short-term debt investments?
14) A company that acquires less than 20% ownership interest in another company should account for the stock investment in that company using
15) Securities bought and held primarily for sale in the near term to generate income on short-term price differences are
Click here for the solution: Corporations invest in other companies for all of the following reasons except to
2) A typical investment to house excess cash until needed is
3) Pension funds and mutual funds regularly invest in debt and stock securities to
4) On January 1, 2008, Turner Company purchased at face value, a $1,000, 7% bond that pays interest on January 1 and July 1. Turner Company has a calendar year end.
The entry for the receipt of interest on July 1, 2008, is
5) If a short-term debt investment is sold, the Investment account is
6) Steven Co. purchased 30, 6% Johnston Company bonds for $30,000 cash plus brokerage fees of $300. Interest is payable semiannually on July 1 and January 1. The entry to record the December 31 interest accrual would include a
7) If an investor owns less than 20% of the common stock of another corporation as a long-term investment,
8) If the equity method is being used, cash dividends received
9) If one company owns more than 50% of the common stock of another company,
10) The contra-account, Market Adjustment, is also called a(n)
11) The balance in the Unrealized Loss—Equity account will
12) If the cost of an available-for-sale security exceeds its fair value by $40,000, the entry to recognize the loss
13) Which of the following is a major difference when accounting for long-term debt investments versus short-term debt investments?
14) A company that acquires less than 20% ownership interest in another company should account for the stock investment in that company using
15) Securities bought and held primarily for sale in the near term to generate income on short-term price differences are
Click here for the solution: Corporations invest in other companies for all of the following reasons except to
Sunday, June 28, 2015
Pack & Carry is debating whether to invest in new equipment to manufacture a line of high-quality luggage
Pack & Carry is debating whether to invest in new equipment to
manufacture a line of high-quality luggage. The new equipment would cost
$1,728,125, with an estimated five-year life and no salvage value. The
estimated annual operating results with the new equipment are as
follows:
Revenue from Sales of New Luggage $800,000
Expenses Other Than Depreciation $306,250
Depreciation (Straight-Line Basis) 345,625 651,875
Increase in Net Income from the New Line 148,125
All revenue from the new luggage line and all expenses (except
depreciation) will be received or paid in cash in the same period as
recognized for accounting purposes. You are to compute the following for
the investment in the new equipment to produce the new luggage line:
a. Annual cash flows.
b. Payback period.
c. Return on average investment.
d. Total present value of the expected future annual cash inflows, discounted at an annual rate of 10 percent.
e. Net present value of the proposed investment discounted at 10 percent.
Click here for the solution: Pack & Carry is debating whether to invest in new equipment to manufacture a line of high-quality luggage
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