Laws Corporation is considering the purchase of a machine costing $16,000. Estimated cash savings from using the new machine are
1 answer:
Answer:
14%
Explanation:
Let IRR from machine be represented with i
Now, $4,120 * Cumulative PV factor (i, 6 periods) = $16,000
Cumulative PV factor (i, 6 periods) = $16,000 / $4,120
Cumulative PV factor (i, 6 periods) = 3.883
Now, we refer to PV factor table, the PV Factor (3.883) falls nearest to i =14%. (See proof in the attached table as attached below)
So therefore, IRR = 14%
So, the machine's internal rate of return is closest to 14%.
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Answer:
Favorable for price and unfavorable for usage.
Explanation:
Provided Information,
Standard Material = 2.2 pounds per unit
Standard cost = $2 per pound
Actual Quantity = 2.3 pounds per unit
Actual cost = $1.95 per pound
In Material Price variance we have = (Standard Price - Actual Price) Actual Quantity
Since Standard Price $2 is more than actual price = $1.95 the variance is favorable.
In material quantity variance we have = (Standard Quantity - Actual Quantity) Standard Rate
Since actual quantity used = 2.3 pounds is more than standard 2.2 pounds the variance will be unfavorable
Therefore, Price Variance = Favorable, and Quantity Variance = Unfavorable.