Financial and Managerial Accounting
15th Edition
ISBN: 9780357297162
Author: Carl S. Warren; Jefferson P. Jones; William B. Tayler, Ph.D., CMA
Publisher: Cengage Learning US
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Textbook Question
Chapter 20, Problem 2E
Identify cost graphs
The following cost graphs illustrate various types of cost behavior:
For each of the following costs, identify the cost graph that best illustrates its cost behavior as the number of units produced increases:
- A. Total direct materials cost
- B. Electricity costs of $1,000 per month plus $0.10 per kilowatt-hour
- C. Per-unit cost of straight-line
depreciation on factory equipment - D. Salary of quality control supervisor, $20,000 per month
- E. Per-unit direct labor cost
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KIARA LIMITED
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER:
ASSETS
Property, plant and equipment (cost)
Accumulated depreciation
Long-term investments
Inventory
Accounts receivable
Company tax paid in advance
Bank
EQUITY AND LIABILITIES
2024
2023
R
R
2 490 000
1 620 000
(630 000)
660 000
1 050 000
1 230 000
30 000
(480 000)
450 000
1 290 000
900 000
0
750 000
660 000
5 580 000
4 440 000
Ordinary share capital
2 700 000
2 000 000
Retained income
1 500 000
1 158 000
Long-term loan from Kip Bank (15%)
900 000
1 000 000
Accounts payable
480 000
228 000
Company tax payable
0
54 000
5 580 000
4 440 000
ADDITIONAL INFORMATION
All purchases and sales are on credit.
Interim dividends paid during the year amounted to R150 750.
Credit terms of 3/10 net 60 days are granted by creditors.
Accounting Question
REQUIRED
Study the information given below and answer the following questions. Where discount factors are required
use only the four decimals present value tables that appear after the formula sheet or in the module guide.
Ignore taxes.
5.1 Calculate the Accounting Rate of Return on average investment of the second alternative
(expressed to two decimal places).
5.2 Determine which of the two investment opportunities the company should choose by
calculating the Net Present Value of each alternative. Your answer must include the
calculation of the present values and NPV.
5.3 Calculate the Internal Rate of Return of the first alterative (expressed to two decimal
places). Your answer must include two net present value calculations (using consecutive
rates/percentages) and interpolation.
INFORMATION
The management of Bentall Incorporated is considering two investment opportunities:
(5 marks)
(9 marks)
(6 marks)
The first alternative involves the purchase of a new machine for R900 000 which…
Chapter 20 Solutions
Financial and Managerial Accounting
Ch. 20 - Describe how total variable costs and unit...Ch. 20 - Which of the following costs would be classified...Ch. 20 - Describe how total fixed costs and unit fixed...Ch. 20 - In applying the high-low method of cost estimation...Ch. 20 - If fixed costs increase, what would be the impact...Ch. 20 - Prob. 6DQCh. 20 - Prob. 7DQCh. 20 - Both Austin Company and Hill Company had the same...Ch. 20 - Prob. 9DQCh. 20 - What does operating leverage measure, and how is...
Ch. 20 - High-low method The manufacturing costs of...Ch. 20 - Contribution margin Waite Company sells 250,000...Ch. 20 - Prob. 3BECh. 20 - Prob. 4BECh. 20 - Sales mix and break-even analysis Conley Company...Ch. 20 - Prob. 6BECh. 20 - Margin of safety Jorgensen Company has sales of...Ch. 20 - Classify Costs Following is a list of various...Ch. 20 - Identify cost graphs The following cost graphs...Ch. 20 - Identify activity bases For a major university,...Ch. 20 - Identify activity bases From the following list of...Ch. 20 - Identify fixed and variable costs Intuit Inc....Ch. 20 - Relevant range and fixed and variable costs Child...Ch. 20 - High-low method Ziegler Inc. has decided to use...Ch. 20 - High-low method for a service company Continental...Ch. 20 - Contribution margin ratio Young Company budgets...Ch. 20 - Contribution margin and contribution margin ratio...Ch. 20 - Break-even sales and sales to realize operating...Ch. 20 - Prob. 12ECh. 20 - Prob. 13ECh. 20 - Prob. 14ECh. 20 - Break-even analysis Media outlets such as ESPN and...Ch. 20 - Prob. 16ECh. 20 - Prob. 17ECh. 20 - Prob. 18ECh. 20 - Prob. 19ECh. 20 - Prob. 20ECh. 20 - Prob. 21ECh. 20 - Break-even sales and sales mix for a service...Ch. 20 - Margin of safety A. If Canace Company, with a...Ch. 20 - Prob. 24ECh. 20 - Operating leverage Beck Inc. and Bryant Inc. have...Ch. 20 - Classify costs Seymour Clothing Co. manufactures a...Ch. 20 - Prob. 2PACh. 20 - Prob. 3PACh. 20 - Prob. 4PACh. 20 - Prob. 5PACh. 20 - Contribution margin, break-even sales,...Ch. 20 - Classify costs Cromwell Furniture Company...Ch. 20 - Break-even sales under present and proposed...Ch. 20 - Prob. 3PBCh. 20 - Prob. 4PBCh. 20 - Prob. 5PBCh. 20 - Contribution margin, break-even sales,...Ch. 20 - Prob. 1MADCh. 20 - Prob. 2MADCh. 20 - Prob. 3MADCh. 20 - Break-even number of guests for a theme park...Ch. 20 - Prob. 1TIFCh. 20 - Communication Sun Airlines is a commercial airline...Ch. 20 - Profitability strategies Somerset Inc. has...Ch. 20 - Prob. 5TIFCh. 20 - Analysis of costs for a shipping department Sales...Ch. 20 - Taylor Corporation is analyzing the cost behavior...Ch. 20 - Kimber Company has the following unit costs for...Ch. 20 - Bolger and Co. manufactures large gaskets for the...Ch. 20 - Eagle Brand Inc. produces two products as follows:...
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