Oak plc is considering a project that has the following predicted revenue and expenses in its first year: £000 140 Revenue Salaries (sunk costs - incurred whether or not the project proceeds) (40) Depreciation Other overheads (30) (20) 50 Profit Notes: 1. 'Other overheads' contain £8,000 which represents a fair share of the overheads for the business as a whole. 2. If the project is not undertaken, part of the factory would be freed up and could be sub-let for £15,000 per year. 3. The business employs net present value analysis to appraise its projects. O A. £113,000 B. £111,000 C. £95,000 D. £86,000

Oak plc is considering a project that has the following predicted revenue and expenses in its first year: £000 140 Revenue Salaries (sunk costs - incurred whether or not the project proceeds) (40) Depreciation Other overheads (30) (20) 50 Profit Notes: 1. 'Other overheads' contain £8,000 which represents a fair share of the overheads for the business as a whole. 2. If the project is not undertaken, part of the factory would be freed up and could be sub-let for £15,000 per year. 3. The business employs net present value analysis to appraise its projects. O A. £113,000 B. £111,000 C. £95,000 D. £86,000

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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Oak plc is considering a project that has the following predicted revenue and expenses in its first year:
£000
140
Revenue
Salaries (sunk costs - incurred whether or not the project proceeds)
Depreciation
Other overheads
(40)
(30)
(20)
50
Profit
Notes:
1. 'Other overheads' contain £8,000 which represents a fair share of the overheads for the business as a whole.
2. If the project is not undertaken, part of the factory would be freed up and could be sub-let for £15,000 per year.
3. The business employs net present value analysis to appraise its projects.
O A. £113,000
O B. £111,000
O C. £95,000
O D. £86,000
A
P.
5: W Click to select your answer.
7: In.

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