Answer:
C. NPV is the discounted present value of a project's expected future accounting net income at the required return, subtracting the initial investment.
Explanation:
NPV means Net Present Value, this is calculated by computing the present value of cash returns and not the accounting income, as accounting income takes in account non cash items also, although while computing returns the non cash transactions are not considered.
Therefore the chosen statement which states about accounting income less initial investment is false as even in case the project requires additional mid term investment then that is also considered.
Thus, false statement is
Statement C
Answer:
$46,000
Explanation:
The computation of the total liabilities at the end of the first year is shown below:
We know that
Total assets = Total liabilities + stockholder equity
where,
Total assets = Cash + land + short term investment
= $102,000 + $40,000 + $14,000
= $156,000
Stockholder equity = Common stock + net income - dividend paid
= $50,000 + 72,000 - $12,000
= $110,000
So, the total liabilities would be
= $156,000 - $110,000
= $46,000
Working Note:
The net income is
= Revenue - cost of goods sold - Salaries Expense - Utilities Expense - Advertising Expense
= $160,000 - $46,000 - $21,000 - $11,000 - $10,000
= $72,000
Answer:
devopment expense 4,000,000
software package depreicaiton expense 2,000,000
training employees expense <u> 50,000</u>
Total expenses 6,050,000
Explanation:
the cost before the knowledge of future benefit will come for the development of the software is treated as expense. The reasoning behind this is the potential uncertainty about the furture at this time. The company didn't know about the likelihood of future benefits.
The toher 8,000,000 million will be amortize over a 4-year period:
8,000,000 / 4 = 2,000,000 depreciation expense
The training wil be considered expense for the period.
The difference other markets; apart from the US market, have is tht they have exotic wishes which need to be fullfilled but more importantly they have other goods, perhaps not created on the US market. This makes other economies a viable way to earn more mone for the US economy.
Answer:
80000 unit of Alpha
Explanation:
This is a Limiting factor/resource constraint question. In certain situations entities suffer from shortage of necessary resources (e.g: shortage of material, labor hours, machine hours), in such circumstances entities strive to allocate the constraint resources to the production of those products which generate the highest contribution per limiting factor and help maximize total contribution. In this case the limiting factor for Cane is Raw material.
Lets suppose that each unit of <em>Alpha and Beta sell for $120 and $80</em> respectively and variable cost per unit of <em>Alpha and Beta is $69 and $20 </em>respectively. Each unit of <em>Alpha and Beta require 2 and 5 pounds</em> of raw material for production respectively.
Now that we have supposed the data we have to compute contribution per unit and then contribution per limiting factor and based on the ranking (i.e highest first) of contribution per limiting factor we decide which product should be given priority for resource allocation.
<em>Lets calculate contribution per unit.</em>
Alpha:
Contribution per unit= SP-VC
Where, SP stands for selling price and VC stands for variable cost.
CPU= 120-69
CPU=$51
Beta:
Contribution per unit= 80-40
CPU=$40
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<em>Now, lets calculate contribution per limiting factor.</em>
Alpha:
CLF: $51÷2
CLF: $25.5 1st Rank
Beta:
CLF: $40÷5
CLF: $8 2nd Rank
So clearly Alpha has a greater contribution per limiting factor and it implies that Alpha will earn the highest contribution margin therefore Cane should produce and allocate resources to Alpha first and then Beta if there remains any?
Profit maximizing output:
It requires 2 pounds of raw material to produce one unit of Alpha (i.e 80000×2=160000) Therefore Cane should produce 80000 units of Alpha only in order to maximize its profits.
