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Marianna [84]
3 years ago
9

Rowell Company spent $3 million two years ago to build a plant for a new product. It then decided not to go forward with the pro

ject, so the building is available for sale or for a new product. Rowell owns the building free and clear, that is, there is no mortgage on it. Which of the following statements is CORRECT?
A. Since the building has been paid for, it can be used by another project with no additional cost. Therefore, it should not be reflected in the cash flows for any new project.
B. If the building could be sold, then the after-tax proceeds that would be generated by any such sale should be charged as a cost to any new project that would use it.
C. This is an example of an externality, because the very existence of the building affects the cash flows for any new project that Rowell might consider.
D. Since the building was built in the past, its cost is a sunk cost and thus need not be considered when new projects are being evaluated, even if it would be used by those new projects.
E. If there is a mortgage loan on the building, then the interest on that loan would have to be charged to any new project that used the building.
Business
1 answer:
ELEN [110]3 years ago
3 0

Answer:

B. If the building could be sold, then the after-tax proceeds that would be generated by any such sale should be charged as a cost to any new project that would use it.

Explanation:

The proceeds from a potential sale are the opportunity cost of using the building for a given project instead of selling to a third party. Not including any cost will lead to project not recovering the entire capital used in it.

Is important to notice this is the after-tax proceeds from the sale of the building.

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Dell Computers wants to reach all potential users of their products, both industrial buyers and final consumers. They would most
Vera_Pavlovna [14]

Answer:

The correct answer is letter "B": national.

Explanation:

National advertising refers to a marketing strategy in which a company aims to offer a good or service in the same proportion all over a country. This advertising is massive and involves promoting the corporation's product through different mediums of communications such as <em>television, radio, newspapers, </em>or <em>billboards</em>. The campaign is directed to individual consumers and organizations.

5 0
3 years ago
The establishment of lobster fishing season in the state of Florida is an example of:
SashulF [63]

Answer:

Government intervention in the economy.

Explanation:

The government in some cases take actions that affect the economy to have an impact and address inefficiencies. In this case, the intervention takes the form of a regulation that establishes a lobster fishing season in the state of Florida. Because of that, the answer is that this is an example of government intervention in the economy.

5 0
3 years ago
g A joint product is: Select one: a. Any product which consists of several parts. b. Any product produced by a company with more
mr_godi [17]

Answer:

The correct answer is letter "D": One of several products produced from a common input.

Explanation:

Joint products are those manufactured by large companies whose production process is the same at an early stage for all the different products being produced, but at a certain stage, called a split-off, the products begin to have their own characteristics.

Since the products initially come from the same input, the costs are allocated in the bundle. After the split-off, the cost of production is allocated to each type of product.

8 0
3 years ago
Westmoreland Corporation prepared its statement of cash flows for the year. The following information is taken from that stateme
vitfil [10]

Answer:

Cash Balance at the beginning of the year = $4,600

Explanation:

Opening Cash Balance = Closing Cash Balance - Net Increase (Decrease) in Cash

Opening Cash Balance = $18,100 - $13,500 = $4,600

5 0
3 years ago
Fleming Company has the following cumulative taxable temporary differences: 12/31/18 12/31/17 $1,600,000 $2,250,000 The tax rate
jeyben [28]

Answer:

Pretax financial income is $3,350,000.00

Explanation:

Fleming's pretax financial income is the taxable income for 2018 plus the increase in cumulative taxable temporary difference in 2018.

Taxable income is $4,000,000

Difference in cumulative  taxable difference=$1,600,000-$2,250,000

                                                                        =-$650,000

pretax  financial income=$4,000,000+(-$650,000)

                                                    =$4,000,000-$650,000

                                                    =$ 3,350,000.00  

The pretax financial income for year 2018 is  $3,350,000.00  

7 0
3 years ago
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