FINANCIAL AND MANAGERIAL ACCOUNTING
9th Edition
ISBN: 2818440048890
Author: Wild
Publisher: MCG CUSTOM
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Question
Chapter 24, Problem 1QS
To determine
Investment decision:
Investment decision can be referred to as capital budgeting. It involves finding solutions to questions like whether to add to capital assets today will increase the revenues of tomorrow to cover costs.
The payback period of the investment.
Expert Solution & Answer
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Answer to Problem 1QS
Solution:
The payback period of the investment is 3 years.
Explanation of Solution
Calculate the payback period as shown below.
Therefore, the payback period is 3 years.
Conclusion
Hence, the payback period of the investment is 3 years.
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Garrison Polymers produces synthetic materials used in the manufacturing of electronic components. In 2015, its first year of operations, Garrison produced 5,000 tons of synthetic material and sold 3,200 tons. In 2016, the company produced the same amount and sales were 6,000 tons (i.e., the company sold all of its inventory). In each year, the selling price per ton was $2,500, variable manufacturing costs per ton were $500, and variable selling expenses were $700 per ton. Fixed manufacturing costs were $5,000,000, and fixed administrative expenses were $600,000. What is the net income under variable costing in year 2015? Help
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