# For denniswright | Accounting homework help

**Question 2** (2.5 points)

Cost to Cowboys to make the part:

Direct materials, $4

Direct labor, $16

Variable factory overhead, $18

Fixed factory overhead, $10

Cost to buy the part for Dolphins Company, $36

Which decision should Cowboys make & what is the total cost savings that would result?

**Question 3** (2.5 points)

Company X has gathered the following data for it’s three product lines, X, Y, and Z.

Product X | Product Y | Product Z | |

Contribution Margin | $10,000 | $12,000 | $22,500 |

Units Produced | 1,000 | 2,400 | 1,800 |

Labor hours required/unit | 4 | 4 | 5 |

Machine hours required/unit | 4 | 4 | 5 |

If Company X has a limited supply of labor hours, which product(s) should it prefer most?

**Question 4** (2.5 points)

Which of the following statements is true

**Question 5** (2.5 points)

A company uses the net present value method to evaluate planned capital expenditures. Everything else being equal, the lower the required rate of return they use, the ____ will be the net present value.

**Question 6** (2.5 points)

The after-tax net cash inflow on the investment is

**Question 7** (2.5 points)

The payback period is

**Question 8** (2.5 points)

Equipment is purchased at a cost of $39,000. As a result, annual cash revenues will increase by $20,000; annual cash operating expenses will increase by $7,000; straight-line depreciation is used; the asset has a ten-year life; the salvage value is $3,000. Assuming a tax bracket of 34%, determine the accounting rate of return? (round to the nearest %)

**Question 9** (2.5 points)

Shirt Co. wants to purchase a new cutting machine for its sewing plant. The investment is expected to generate annual net cash inflows of $30,000, have a useful life of 8 years, and an estimated salvage value of $10,000. If Shirt Co. has a required rate of return of 12%, the maximum amount they will be willing to spend for this machine is

**Question 10** (2.5 points)

Darlington Company is considering investing in an equipment, which will increase yearly cash revenues by $65000, and yearly cash expenses to operate the equipment by $30,000. The asset will cost $200,000, and will last 8 years, with a salvage value of $40,000. Assuming a tax rate of 39%, determine the net present value of this asset, if the company requires a 10% return on investments.

**Question 11** (2.5 points)

A company uses the net present value methodology in making capital expenditure decisions. In making a decision where they have to choose among two pieces of equipment, which of the following pieces of information will be considered irrelevant

**Question 12** (2.5 points)

Baton Rouge Company is considering purchasing new equipment which will cost $950,000. This equipment is expected to have a useful life of 15 years, have a salvage value of $50,000 and is expected to have an annual net cash inflow (before taxes) of $80,000. Assume the company is in the 34% tax bracket.

What is Baton Rouge’s annual net cash inflow (after taxes)?

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