Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula: R e t u r n o n i n v e s t m e n t = N e t O p e r a t i n g I n c o m e A v e r a g e o p e r a t i n g a s s e t s Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows: P a y b a c k P e r i o d = I n i t i a l I n v e s t m e n t A n n u a l C a s h inf l o w Requirement-a: To Calculate: The Return on investment for the project

Question

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Answer 1

Question

Chapter 16, Problem 16.25E

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-a:

To Calculate:

The Return on investment for the project

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-b:

To Indicate:

The importance of Payback period for the decision making

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Activity Based Costing - practice problem Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities 1. Materials handling 2. Machine setups Cost Drivers Number of requisitions Number of setups Total cost $35,000 27,500 3. Quality inspections Number of inspections 27,000 $89.500 The cost driver volume for each product was as follows: Cost Drivers Instruments Gauge Total Number of requisitions 400 600 1,000 Number of setups 200 300 500 Number of inspections 200 400 600 Insructions (a) Determine the overhead rate for each activity. (b) Assign the manufacturing overhead costs for April to the two products using activity-based costing.

Bodhi Company has three cost pools and two doggie products (leashes and collars). The activity cost pool of ordering has the cost drive of purchase orders. The activity cost pool of assembly has a cost driver of parts. The activity cost pool of supervising has the cost driver of labor hours. The accumulated data relative to those cost drivers is as follows: Expected Use of Estimated Cost Drivers by Product Cost Drivers Overhead Leashes Collars Purchase orders $260,000 70,000 60,000 Parts 400,000 300,000 500,000 Labor hours 300,000 15,000 10,000 $960,000 Instructions: (a) Compute the activity-based overhead rates. (b) Compute the costs assigned to leashes and collars for each activity cost pool. (c) Compute the total costs assigned to each product.

Torre Corporation incurred the following transactions. 1. Purchased raw materials on account $46,300. 2. Raw Materials of $36,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,800 was classified as indirect materials. 3. Factory labor costs incurred were $55,900, of which $51,000 pertained to factory wages payable and $4,900 pertained to employer payroll taxes payable. 4. Time tickets indicated that $50,000 was direct labor and $5,900 was indirect labor. 5. Overhead costs incurred on account were $80,500. 6. Manufacturing overhead was applied at the rate of 150% of direct labor cost. 7. Goods costing $88,000 were completed and transferred to finished goods. 8. Finished goods costing $75,000 to manufacture were sold on account for $103,000. Instructions Journalize the transactions.

Answer 2

Question

Chapter 16, Problem 16.25E

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-a:

To Calculate:

The Return on investment for the project

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-b:

To Indicate:

The importance of Payback period for the decision making

Expert Solution & Answer

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Answer 3

Question

Chapter 16, Problem 16.25E

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-a:

To Calculate:

The Return on investment for the project

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-b:

To Indicate:

The importance of Payback period for the decision making

Expert Solution & Answer

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Answer 4

Question

Chapter 16, Problem 16.25E

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-a:

To Calculate:

The Return on investment for the project

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-b:

To Indicate:

The importance of Payback period for the decision making

Expert Solution & Answer

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Answer 5

Chapter 16, Problem 16.25E

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-a:

To Calculate:

The Return on investment for the project

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-b:

To Indicate:

The importance of Payback period for the decision making

Answer 6

Chapter 16, Problem 16.25E

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-a:

To Calculate:

The Return on investment for the project

Answer 7

Chapter 16, Problem 16.25E

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-a:

To Calculate:

The Return on investment for the project

Answer 8

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-b:

To Indicate:

The importance of Payback period for the decision making

Answer 9

To determine

Concept Introduction:

Return on Investment (ROI): The return on investment is a profitability ratio that measures the percentage of profit earned on the investment made. It is calculated with the help of following formula:
Return on investment = Net Operating IncomeAverage operating assets

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:
Payback Period= Initial InvestmentAnnual Cash inflow

Requirement-b:

To Indicate:

The importance of Payback period for the decision making

Answer 10

Expert Solution & Answer

Answer 11

Expert Solution & Answer

Answer 12

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Answer 13

Ch. 16 - Prob. 16.1ME Ch. 16 - Prob. 16.2ME Ch. 16 - Mini-Exercise 16.3 LO 2. 3 The make or buy...Ch. 16 - Prob. 16.4ME Ch. 16 - Mini-Exercise 16.5 LO 7 Net present ratio and IRR...Ch. 16 - Mini-Exercise 16.6 LO 9. 10 Payback period and...Ch. 16 - Exercise 16.7 LO 1 Application of cost terminology...Ch. 16 - Prob. 16.8E Ch. 16 - Exercise 16.9 LO 2, 3 Sell or process further?...Ch. 16 - Exercise 16.10 LO 2. 3 Sell or process further?...

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