FINANCIAL AND MANAGERIAL ACCOUNTING
FINANCIAL AND MANAGERIAL ACCOUNTING
9th Edition
ISBN: 9781264899180
Author: Wild
Publisher: MCG
Question
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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
Check Mark

Answer to Problem 1QS

Solution:

The payback period of the investment is 3 years.

Explanation of Solution

Calculate the payback period as shown below.

    Paybackperiod=TotalinvestmentAmountinvested=$27,000$9,000=3years

Therefore, the payback period is 3 years.

Conclusion

Hence, the payback period of the investment is 3 years.

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Craft Company produces a single product. Last year, the company had a net operating income of $104,960 using absorption costing and $83,000 using variable costing. The fixed manufacturing overhead cost was $12 per unit. There were no beginning inventories. If 29,600 units were produced last year, then sales last year were: a. 7,640 units b. 51,560 units c. 31,430 units d. 27,770 units
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