A Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with each are listed below: Contract revenue Materials Contract X Contract Z $ 260,000 $ 200,000 10,000 10,000 Labor costs 88,000 120,000 Depreciation on 8,000 10,000 equipment Cost incurred for 1,500 1,500 consulting advice Allocated portion of overhead 5,000 3,000 The equipment was purchased last year and has no resale value. Which of these amounts is relevant for the selection of one contract over another? OA. Contract revenue and labor costs OB. Materials, consulting advice, and allocated overhead OC. Cost of consulting advice and allocated overhead OD. Contract revenue, labor costs, depreciation on equipment and allocated portion of overhead OE. None of the above

A Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with each are listed below: Contract revenue Materials Contract X Contract Z $ 260,000 $ 200,000 10,000 10,000 Labor costs 88,000 120,000 Depreciation on 8,000 10,000 equipment Cost incurred for 1,500 1,500 consulting advice Allocated portion of overhead 5,000 3,000 The equipment was purchased last year and has no resale value. Which of these amounts is relevant for the selection of one contract over another? OA. Contract revenue and labor costs OB. Materials, consulting advice, and allocated overhead OC. Cost of consulting advice and allocated overhead OD. Contract revenue, labor costs, depreciation on equipment and allocated portion of overhead OE. None of the above

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Amcor PLC has decided to air-condition its factory to improve its performances. The cost of the air-condition is Rs 1 600 000.It has 5 year useful life with no residual value, Further additional maintenance expense of Rs 240 000 per annum will be incurred for the air conditioner. The company depreciates all machineries on straight line method. Its estimated annual labour cost savings due to employees performance during its life time is given below.Year 1 400 000 Year 2 450 000 Year 3 750 000 Year 4 1550 000 Year 5 1650 000Required:i) Calculate ARR for the investment project?ii) Calculate the Net Present Value of the Project assuming the cost of capital is 10% Year 0 1 2 3 4 5DCF 1 0.909 0.826 0.751 0.683 0.621
SOLVE THE A B C
1
Stuart Corporation incurs the following annual fixed costs. Item Depreciation Officers' salaries Long-term lease Property taxes Cost $ 66,000 190,000 Units Produced Fixed cost per unit Required Determine the total fixed cost per unit of production, assuming that Stuart produces 10,000, 10,500, or 11,000 units. (Round your answers to 2 decimal places.) 50,000 11,000 10,000 10,500 11,000
ABC Co. started work on an P8,000,000 fixed-price construction contract in 20x1. Information on the contract is as follows: 20x2 20x1 2,850,000 3,670,000 Costs incurred per year Estimated costs to complete 4,275,000 1,630,000 How much profit (loss) is recognized in 20x2?
Covidam Company clinches a contract to supply cleaning services to a nursing home for the next 5 years. Under the contract, the Company will be paid $1 million a year. To take up this contract, it would have to invest in new cleaning equipment costing $600,000 which will be depreciated straight line to zero over 5 years. There is no salvage value at the end of 5 years. Labour cost will be $300,000 per year and overheads $250,000per year. The Company will need to invest in net working capital of $350,000. It plans to issue $1 million worth of bonds for 5 years at a coupon rate of 6% and will price the bonds at par. The Company has an existing bank loan of $9 million. The cost of debt from the bank loan is the same as the bonds. The common stock of the Company is selling for $10 per share and it has 2 million shares outstanding. Expected dividend next year is $1 per share and dividends are expected to grow at 2% per annum into the foreseeable future. The tax rate is 20%.(a) Determine the…
Boat Brothers has been asked to refit a boat for a customer. Skilled labour costing £16 per hour will be required for the refit. The workers will have to be taken off the production of kayak for resale for a total of 480 hours. The kayak are sold for £400 each and take 24 hours of skilled labour. The material cost of each kayak is 120. What is the relevant cost when assessing the viability of the refit contract? OA. £5,600 OB. £8,000 OC. £3,840 OD. £1,760 Next
A company wants to determine the optimal replacement policy for its equipment. New equipment costs $10,000. The company does not keep their equipment longer than 2 years and has estimated the annual operating costs and trade-in values for equipment during each of the 2 years as: Age in years 0 to 1 1 to 2 Operating Cost $5,000 $7,000 Trade-in Value $8,000 $6,000 What is the net replacement cost at year 3 if the company used the equipment for two years from year 1? c. $11,000 d. $9,000 a. $16,000 b. $14,000
Algor Inc. entered into a $975,000 3-year contract to maintain a client's computer system. At the end of the first year, the costs incurred on the contract were $225,000 and it was estimated that a further $520,000 would be incurred over the remaining years of the contract. What is the amount of profit that can be recognized on this contract for the first year? $196,875 $69.463 $421,875 $294.463
B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $144,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows. Sales of new product $ 90,000 Expenses Materials, labor, and overhead (except depreciation) 48,000 Depreciation—Equipment 12,000 Selling, general, and administrative expenses 9,000 Income $ 21,000 (a) Compute the annual net cash flow.(b) Compute the payback period.(c) Compute the accounting rate of return for this equipment. I could not include an image for "C" please answer seperately