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Payback period, Accounting
All the above are the methods of capital budgeting which are having separate principles of deciding on which investment shall be taken up:
Payback period: This method is based on principle that the projects which recover which initial
Accounting rate of return: This method computes the simple rate of return on the average investment involved in the projects and the projects which provides the highest return shall be accepted.
Net Present value: This method is based on principle of time value of money and takes decision on the basis of net residual
Internal return of return: This method also suggest the rate of return which the investment will realize after considering the present value of cash inflows and outflows. The
Profitability Index: Profitability index is also a proportion of present value of cash inflows and initial investment. The project with higher ratio shall be accepted over the other projects.
Requirement1-a:
Thepayback period of the project shall be determined.
Requirement 1-b:
The Accounting rate of return of the project shall be computed.
Requirement1-c:
The net present value of project at 10% discount rate shall be computed.
Requirement1-d:
The Internal rate of return shall be determined
Requirement1-e:
The Profitability index of the project shall be determined.
Requirement2:
The decision on the project acceptance or rejection to be taken.
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Chapter 26 Solutions
ACCOUNTING PRINCIPLES 122 5/16 >C<
- Data for the two departments of Gurley Industries for September of the current fiscal year are as follows: Drawing Department Winding Department Work in process, September 1 4,900 units, 20% completed 3,000 units, 65% completed Completed and transferred to next processing department during September 67,100 units 66,000 units Work in process, September 30 3,700 units, 55% completed 4,100 units, 20% completed Production begins in the Drawing Department and finishes in the Winding Department. Question Content Area a. If all direct materials are placed in process at the beginning of production, determine the direct materials and conversion equivalent units of production for September for the Drawing Department. If an amount is zero, enter in "0". Drawing DepartmentDirect Materials and Conversion Equivalent Units of ProductionFor September Line Item Description Whole Units Direct MaterialsEquivalent Units ConversionEquivalent Units Inventory in process,…arrow_forwardThe charges to Work in Process—Assembly Department for a period, together with information concerning production, are as follows. All direct materials are placed in process at the beginning of production. Work in Process-Assembly Department Transaction Debit amount Transaction Credit amount Bal., 3,000 units, 45% completed 6,900 To Finished Goods, 69,000 units ? Direct materials, 71,000 units @ $1.4 99,400 Direct labor 106,400 Factory overhead 41,440 Bal., ? units, 55% completed ? Cost per equivalent units of $1.40 for Direct Materials and $2.10 for Conversion Costs. a. Based on the above data, determine the different costs listed below. Line Item Description Amount 1. Cost of beginning work in process inventory completed this period fill in the blank 1 of 4$ 2. Cost of units transferred to finished goods during the period fill in the blank 2 of 4$ 3. Cost of ending work in process inventory fill in the blank 3 of 4$ 4. Cost per unit of…arrow_forwardHii expert please given correct answer financial accountingarrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
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