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Anit [1.1K]
3 years ago
6

J Corporation has gathered the following data on a proposed investment project (Ignore income taxes.): Investment required in eq

uipment $ 30,500 Annual cash inflows $ 6,200 Salvage value of equipment $ 0 Life of the investment 15 years Required rate of return 10 % The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. The simple rate of return for the investment (rounded to the nearest tenth of a percent) is:
Business
1 answer:
IrinaVladis [17]3 years ago
6 0

Answer:

Simple accounting  rate of return= 27.32%

Explanation:

The accounting rate of return = Average annual operating income / Average investment

Annual depreciation = ( Cost - Salvage value)/No of years = (30,500 - 0 )/15

                                =       2033.33

Average Investment -= (Cost + scrap Value)/ 2

                                   = (30500 + 0)/2 =15,250

Average Annual income = 6,200 - 2033.33

                                         = 4166.67

Simple accounting rate of return =( 4,166.667/ 15,250 )× 100

                                                     = 27.32%

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7 0
2 years ago
L Corporation produces and sells 15,300 units of Product X each month. The selling price of Product X is $23 per unit, and varia
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Explanation:

\left[\begin{array}{cccc}-&continued&discontinued&differential\\Sales&351,900&0&-351,900\\Variable&-260,100&0&260,100\\Contribution&91,800&0&-91,800\\Fixed&-103,000&-74,000&29,000\\total&-11,200&-74,000&-62,800\\\end{array}\right]

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5 0
2 years ago
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6 0
3 years ago
The following data refers to Huron Corporation for the year 20x2.
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Answer:

1. schedule of cost of goods manufactured for 20x2

Beginning Work In Process Inventory                                            $ 0

Direct  Materials ($89,000 + $731,000 - $59,000 - $45,000) $716,000

Direct Labor                                                                                 $474,000

Applied manufacturing overhead                                              $577,500

Less Ending Work In Process Inventory                                    ($40,000)

cost of goods manufactured                                                    $1,727,500

2. schedule of cost of goods sold for 20x2.

Beginning Finished goods inventory                     $35,000

Add cost of goods manufactured                       $1,727,500

Less Ending Finished goods inventory                ($40,000)

Cost of Goods Sold                                             $1,722,500

Adjustment :

Less Under-applied Overheads                             ($2,500)

Adjusted Cost of Goods Sold                            $1,720,000

3. income statement for 20x2.

Sales revenue                                                    $2,105,000

Less Cost of Goods Sold                                 ($1,720,000)

Gross Profit                                                          $385,000

Less Expenses :

Selling and administrative expenses               ($269,000)

Net Profit Before tax                                             $116,000

Income tax expense                                            ($25,000)

Net Income after tax                                              $91,000

Explanation:

Calculation of Actual Overheads Incurred

Indirect labor                                                    $150,000

Property taxes on factory                                 $90,000

Depreciation on factory building                    $125,000

Indirect material used                                       $45,000

Depreciation on factory equipment                $60,000

Insurance on factory and equipment              $40,000

Utilities for factory                                             $70,000

Actual Overheads Incurred                            $580,000

Now,

Where Applied Overheads is $577,500 and Actual Overheads is $580,000, we have an underapplied situation of $2,500 ($580,000 - $577,500).

This under-applied amount is closed off to the cost of goods sold.

3 0
3 years ago
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