Accounting question and answers for November 12, 2023
- Q Xi Inc. Date: 30 June 2023Details:Raw material inventory (fiber):Cost: £45,000Replacement cost: £43,000Finished goods inventory:ProductAlphaBetaDirect costs£90,000£70,000Proportion of fixed overhead£25,000£20,000Proportion of selling costs£6,000£5,000Net realizable value£130,000£95,000Furniture: Acquired on 1 July 2019 for £200,000, depreciated over...
- Q ABC Corp is evaluating two potential investments:Investment 1:•Initial Cost: $2,000,000•Annual Cash Inflows: $500,000 for 6 yearsInvestment 2:•Initial Cost: $3,000,000•Annual Cash Inflows: $700,000 for 6 yearsRequirements:1.Compute the NPV for both investments...
- Q Tom's Toys evaluates the profitability of three segments: action figures, dolls, and board games. The financials are:SegmentRevenueDirect CostsAction Figures$500,000$300,000Dolls$200,000$120,000Board Games$90,000$50,000Tom is considering converting the board games area into an expanded action...
- Q Financial Evaluation of Projects (in $):Project A:Initial Cost: $18,000Year 1: $3,000Year 2: $4,000Year 3: $5,000Year 4: $6,000Year 5: $8,000Project B:Initial Cost: $15,000Year 1: $2,000Year 2: $3,500Year 3: $4,500Year 4: $5,000Year...
- Q Project Financial Assessment (in $):Project A:Initial Cost: $50,000Year 1: $10,000Year 2: $15,000Year 3: $20,000Year 4: $25,000Project B:Initial Cost: $45,000Year 1: $5,000Year 2: $10,000Year 3: $20,000Year 4: $30,000Required:Calculate the payback period...
- Q Capital Investment Analysis (in £):ProjectsInitial OutlayYear 1Year 2Year 3Year 4C-£25,000£7,000£8,000£9,000£10,000D-£30,000£6,000£7,000£8,000£9,000Required:Calculate the payback period for each project.Identify the preferred project if the standard payback period is 2.5 years.Compute the NPV at...
- Q WXY Consulting ServicesScenario: Perform Cost-Benefit AnalysisData:Project Costs: $200,000Expected Benefits: $300,000Requirements:Calculate the Net Present Value (NPV) of the project at a discount rate of 10%.Determine the Payback Period and Return on Investment (ROI).Perform sensitivity...
- Q DEF Ltd. is looking to invest $350,000 in a project that is expected to generate the following cash flows:•Year 1: $60,000•Year 2: $70,000•Year 3: $80,000•Year 4: $90,000•Year 5: $100,000•Year 6:...
- Q Nina's Nails evaluates the profitability of three segments: manicures, pedicures, and nail art. The financials are:SegmentRevenueDirect CostsManicures$400,000$240,000Pedicures$200,000$120,000Nail Art$80,000$50,000Nina is considering converting the nail art area into an expanded pedicures area.Required: a....
- Q Delta Corp Details:Initial investment of R600,000 and residual value of R40,000.Cashflows and discount factors:YearCashflowsDiscount FactorYear 1R90,0000.909Year 2R140,0000.826Year 3R130,0000.751Year 4R100,0000.683Year 5R80,0000.621Cost of capital: 9%Depreciation: R30,000 per yearTax rate: 26%Required:Calculate each of...
- Q Zeta ServicesScenario: Allocate CostsData:Cost Pools and Allocation Bases:Cost Pool 1 (Admin Costs): $100,000, Allocation Base: Number of EmployeesCost Pool 2 (IT Costs): $150,000, Allocation Base: Number of ComputersRequirements:Allocate admin costs based...
- Q Epsilon ManufacturingScenario: Evaluate Standard CostsData:Standard Costs:Direct Materials: $5 per unitDirect Labor: $8 per unitVariable Overhead: $3 per unitActual Costs:Direct Materials: $6 per unitDirect Labor: $7 per unitVariable Overhead: $2 per unitRequirements:Calculate...
- Q ABC Corporation is considering selecting a machine out of two mutually exclusive machines. The company's cost of capital is 10% and the tax rate is 25%. Other information related to...
- Q PQR Corporation is considering selecting a machine out of two options. The company's cost of capital is 8% and the tax rate is 30%. Other information related to both machines...
- Q EduLearn Pvt. Ltd. is considering three educational software packages for purchase. The details are as follows. Assume a tax rate of 29% and an interest on capital of 10%.ParticularsPackage A (?)Package...
- Q GreenEnergy Co. is considering three solar panel machines for purchase. The details are as follows. Assume a tax rate of 28% and an interest on capital of 12%.ParticularsMachine Sun (?)Machine Star...
- Q George's Gym evaluates the profitability of three segments: membership fees, personal training, and merchandise. The financials are:SegmentRevenueDirect CostsMembership Fees$500,000$300,000Personal Training$200,000$120,000Merchandise$90,000$50,000George is considering converting the merchandise area into an expanded personal training...
- Q Chris's Clothing evaluates the profitability of three segments: men's wear, women's wear, and children's wear. The financials are:SegmentRevenueDirect CostsMen's Wear$400,000$240,000Women's Wear$200,000$120,000Children's Wear$80,000$50,000Chris is considering converting the children's wear area into an...
- Q AutoParts Ltd. needs to decide between three new assembly line machines. The details are given below. Assume a tax rate of 24% and an interest on capital of 11%.ParticularsMachine X1 (?)Machine...
- Q Sophie's Sports Shop analyzes profitability of three segments: apparel, equipment, and accessories. The financials are:SegmentRevenueDirect CostsApparel$400,000$240,000Equipment$200,000$120,000Accessories$80,000$50,000Sophie is considering converting the accessories area into an expanded apparel area.Required: a. Calculate the necessary...
- Q Delta Manufacturing is evaluating two new projects with the following net cash flows. The company's required rate of return on investments is 13%. PV(0.13)PV(0.13)PV(0.13), FVA@13%FVA @ 13\%FVA@13%, PVA@13%PVA @ 13\%PVA@13%, FV@13%FV...
- Q FastFoods Inc. is considering three new food processing machines. The details are provided below. The corporate tax rate is 26%, and the interest on capital is 10%.ParticularsMachine F1 (?)Machine F2 (?)Machine...
- Q Ben's Books analyzes profitability of three segments: new books, used books, and stationery. The financials are:SegmentRevenueDirect CostsNew Books$400,000$240,000Used Books$200,000$120,000Stationery$90,000$50,000Ben is considering converting the stationery area into an expanded new books area.Required:...
- Q Evans Corp is planning to invest in a project with the following details:Initial investment of R900,000 and an expected residual value of R80,000.YearCashflowsDiscount factorYear 1R140,0000.909Year 2R160,0000.826Year 3R170,0000.751Year 4R120,0000.683Year 5R130,0000.621Cost of...
- Q A company is evaluating the following independent projects. The cash flows are as follows:YearProject XProject YProject ZInitial Outlay-$10,000-$12,000-$8,000Year 1$2,000$4,000$3,000Year 2$4,000$4,000$3,000Year 3$6,000$4,000$3,000Required:Calculate the payback period for each project.Determine the accounting rate...
- Q Jackson Corp is evaluating a project with the following financial projections:Initial investment of R1,800,000 with an expected residual value of R140,000.YearCashflowsDiscount factorYear 1R190,0000.909Year 2R210,0000.826Year 3R220,0000.751Year 4R170,0000.683Year 5R180,0000.621Cost of capital is...
- Q Laura's Library is assessing the profitability of three segments: books, cafe, and events. The financials are:SegmentRevenueDirect CostsBooks$600,000$360,000Cafe$150,000$90,000Events$70,000$40,000Laura is considering converting the events area into an expanded books area.Required: a. Calculate the...
- Q Nina's Nook analyzes profitability of three segments: gifts, home decor, and clothing. The financials are:SegmentRevenueDirect CostsGifts$300,000$180,000Home Decor$150,000$90,000Clothing$70,000$40,000Nina is considering converting the clothing area into an expanded gifts area.Required: a. Calculate the...
- Q Peak Performance manufactures and sells 11 different models of athletic wear. Peak Performance is contemplating a 5% price cut across the board for all 11 models. It expects the price cut...
- Q Carter Enterprises is considering an investment project with the following details:Initial investment of R700,000 and a residual value of R60,000.YearCashflowsDiscount factorYear 1R120,0000.909Year 2R140,0000.826Year 3R150,0000.751Year 4R100,0000.683Year 5R110,0000.621Cost of capital is 8%....
- Q Linda's Laundry evaluates the profitability of three segments: wash and fold, dry cleaning, and alterations. The financials are:SegmentRevenueDirect CostsWash and Fold$200,000$120,000Dry Cleaning$150,000$90,000Alterations$50,000$30,000Linda is considering converting the alterations area into an expanded...
- Q Holly's Home Goods evaluates the profitability of three segments: furniture, decor, and kitchenware. The financials are:SegmentRevenueDirect CostsFurniture$600,000$360,000Decor$200,000$120,000Kitchenware$80,000$50,000Holly is considering converting the kitchenware area into an expanded furniture area.Required: a. By how...
- Q XYZ Ltd. is evaluating two investment projects. The company's cost of capital is 15% and the tax rate is 35%. Other information relating to both projects is as follows:ParticularsProject XProject...
- Q Ingram Enterprises is considering an investment project with the following details:Initial investment of R1,600,000 and an expected residual value of R130,000.YearCashflowsDiscount factorYear 1R180,0000.909Year 2R200,0000.826Year 3R210,0000.751Year 4R160,0000.683Year 5R170,0000.621Cost of capital is...
- Q Consider the following projects with their respective cash flows:YearProject IProject JProject KInitial Outlay-$15,000-$10,000-$20,000Year 1$3,000$4,000$5,000Year 2$4,000$4,000$6,000Year 3$5,000$4,000$7,000Year 4$6,000$4,000$8,000Required:Compute the payback period for each project.Determine the discounted payback period at a discount...
- Q Ella's Electronics evaluates the profitability of three segments: computers, phones, and accessories. The financials are:SegmentRevenueDirect CostsComputers$500,000$300,000Phones$200,000$120,000Accessories$80,000$50,000Ella is considering converting the accessories area into an expanded computers area.Required: a. By how much...
- Q Liam's Landscaping evaluates the profitability of three segments: maintenance, design, and installations. The financials are:SegmentRevenueDirect CostsMaintenance$300,000$180,000Design$150,000$90,000Installations$70,000$40,000Liam is considering converting the installations area into an expanded design area.Required: a. By how much...
- Q Speedy Cycles manufactures and sells 10 different models of racing bicycles. Speedy Cycles is contemplating a 7% price cut across all 10 models. It expects the price cut to result in...
- Q Gamma Industries is considering two new projects with the following net cash flows. The company's required rate of return on investments is 7%. PV(0.07)PV(0.07)PV(0.07), FVA@7%FVA @ 7\%FVA@7%, PVA@7%PVA @ 7\%PVA@7%, FV@7%FV...
- Q Oliver's Optics is assessing the profitability of three segments: glasses, sunglasses, and contact lenses. The financials are:SegmentRevenueDirect CostsGlasses$400,000$240,000Sunglasses$150,000$90,000Contact Lenses$80,000$50,000Oliver is considering converting the contact lenses area into an expanded sunglasses area.Required:...
- Q Ajax Corp is considering investing in a project with the following forecasted details:Initial amount invested is R500,000 and expected residual value is R40,000.YearCashflowsDiscount factorYear 1R100,0000.91Year 2R120,0000.83Year 3R160,0000.75Year 4R80,0000.68Year 5R90,0000.62Assuming that...
- Q Laura's Lingerie is assessing profitability of three segments: bras, panties, and sleepwear. The financial data are:SegmentRevenueDirect CostsBras$300,000$180,000Panties$150,000$90,000Sleepwear$70,000$40,000Laura is considering converting the sleepwear area into an expanded bras area.Required: a. Determine the...
- Q Evan's Entertainment analyzes profitability of three segments: concerts, bar, and merchandise. The financials are:SegmentRevenueDirect CostsConcerts$500,000$300,000Bar$250,000$150,000Merchandise$100,000$60,000Evan is contemplating turning the merchandise area into an expanded bar area.Required: a. By how much must...
- Q Theta Co. is evaluating two new projects with the following net cash flows. The company's required rate of return on investments is 14%. PV(0.14)PV(0.14)PV(0.14), FVA@14%FVA @ 14\%FVA@14%, PVA@14%PVA @ 14\%PVA@14%, FV@14%FV...
- Q Peter's Pet Palace evaluates the profitability of three segments: pet supplies, grooming, and boarding. The financials are:SegmentRevenueDirect CostsPet Supplies$500,000$300,000Grooming$200,000$120,000Boarding$80,000$50,000Peter is considering converting the boarding area into an expanded pet supplies area.Required:...
- Q Baker Ltd is evaluating a project with the following financial projections:Initial investment of R600,000 with an expected residual value of R50,000.YearCashflowsDiscount factorYear 1R110,0000.909Year 2R130,0000.826Year 3R170,0000.751Year 4R90,0000.683Year 5R100,0000.621Assuming a cost of...
- Q A firm is considering three different projects. The expected cash flows are as follows:YearProject AProject BProject CInitial Outlay-$20,000-$15,000-$25,000Year 1$5,000$3,000$8,000Year 2$7,000$5,000$10,000Year 3$10,000$7,000$12,000Required:Calculate the discounted payback period for each project assuming a...
- Q Beta Solutions is evaluating two new projects with the following net cash flows. The company's required rate of return on investments is 10%. PV(0.10)PV(0.10)PV(0.10), FVA@10%FVA @ 10\%FVA@10%, PVA@10%PVA @ 10\%PVA@10%, FV@10%FV...
- Q Harrison Ltd is contemplating a project with these projections:Initial amount invested is R1,400,000 and an expected residual value of R120,000.YearCashflowsDiscount factorYear 1R170,0000.909Year 2R190,0000.826Year 3R200,0000.751Year 4R150,0000.683Year 5R160,0000.621Cost of capital is 8%....
- Q Frank's Fitness evaluates the profitability of three segments: memberships, personal training, and classes. The financials are:SegmentRevenueDirect CostsMemberships$500,000$300,000Personal Training$200,000$120,000Classes$80,000$50,000Frank is considering converting the classes area into an expanded personal training area.Required: a....
- Q FastFoods Inc. is considering three new food processing machines. The details are provided below. The corporate tax rate is 26%, and the interest on capital is 10%.ParticularsMachine F1 (?)Machine F2 (?)Machine...
- Q LMN Inc. is considering selecting a new equipment out of two mutually exclusive options. The company's cost of capital is 11% and the tax rate is 28%. Other information relating...
- Q Tina's Toys evaluates the profitability of three segments: action figures, dolls, and board games. The financials are:SegmentRevenueDirect CostsAction Figures$500,000$300,000Dolls$200,000$120,000Board Games$80,000$50,000Tina is considering converting the board games area into an expanded action...
- Q TUV Corporation is considering two investment opportunities. The company's cost of capital is 15% and the tax rate is 34%. Other information relating to both investments is as follows:ParticularsInvestment 1Investment...
- Q HealthEquip Ltd. wants to expand its equipment line and is evaluating three new machines. The relevant details are provided below. The corporate income-tax rate is 33%, and the interest on capital...
- Q Tim's Toy Store is analyzing the profitability of three segments: action figures, dolls, and board games. The financials are:SegmentRevenueDirect CostsAction Figures$400,000$240,000Dolls$150,000$90,000Board Games$60,000$40,000Tim is considering converting the board games area into an...
- Q Omega Tech is considering two new projects with the following net cash flows. The company's required rate of return on investments is 11%. PV(0.11)PV(0.11)PV(0.11), FVA@11%FVA @ 11\%FVA@11%, PVA@11%PVA @ 11\%PVA@11%, FV@11%FV...
- Q Zeta Technologies is considering two new projects with the following net cash flows. The company's required rate of return on investments is 10%. PV(0.10)PV(0.10)PV(0.10), FVA@10%FVA @ 10\%FVA@10%, PVA@10%PVA @ 10\%PVA@10%, FV@10%FV...
- Q Sophie's Spa analyzes profitability of three segments: massages, facials, and yoga classes. The financials are:SegmentRevenueDirect CostsMassages$300,000$180,000Facials$150,000$90,000Yoga Classes$70,000$40,000Sophie is considering converting the yoga classes area into an expanded massages area.Required: a. By...
- Q George's Garden analyzes profitability of three segments: plants, pots, and fertilizers. The financials are:SegmentRevenueDirect CostsPlants$400,000$240,000Pots$150,000$90,000Fertilizers$70,000$40,000George is considering converting the fertilizers area into an expanded plants area.Required: a. By how much must...
- Q Eco-Friendly Bikes manufactures and sells 9 different models of eco-friendly bikes. Eco-Friendly Bikes is contemplating a 6% price cut across all 9 models. It expects the price cut to result in...
- Q Pat's Pet Supplies evaluates the profitability of three segments: pet food, accessories, and grooming services. The financials are:SegmentRevenueDirect CostsPet Food$500,000$300,000Accessories$200,000$120,000Grooming Services$80,000$50,000Pat is considering converting the grooming services area into an expanded...
- Q Elite Bikes manufactures and sells 12 different models of high-end bicycles. Elite Bikes is contemplating a 5% price cut across all 12 models. It expects the price cut to result...
- Q GHI Enterprises is considering selecting between two projects. The company's cost of capital is 12% and the tax rate is 33%. Other information related to both projects is as follows:ParticularsProject...
- Q JKL Corporation is considering two capital investment options. The company's cost of capital is 14% and the tax rate is 27%. Other information relating to both options is as follows:ParticularsOption...
- Q Sigma Inc. is evaluating two new projects with the following net cash flows. The company's required rate of return on investments is 15%. PV(0.15)PV(0.15)PV(0.15), FVA@15%FVA @ 15\%FVA@15%, PVA@15%PVA @ 15\%PVA@15%, FV@15%FV...
- Q ACME Corp has decided to purchase a machine to expand the company's production capacity. There are three machines under consideration. The relevant details including estimated yearly expenditure and sales are given...
- Q Rachel's Rentals evaluates the profitability of three segments: cars, trucks, and equipment. The financials are:SegmentRevenueDirect CostsCars$600,000$360,000Trucks$200,000$120,000Equipment$80,000$50,000Rachel is considering converting the equipment area into an expanded cars area.Required: a. By how much...
- Q Jake's Juice Bar evaluates the profitability of three segments: smoothies, juices, and snacks. The financials are:SegmentRevenueDirect CostsSmoothies$300,000$180,000Juices$150,000$90,000Snacks$70,000$40,000Jake is considering converting the snacks area into an expanded smoothies area.Required: a. By how...
- Q Sophia's Spa evaluates the profitability of three segments: massages, facials, and nail services. The financials are:SegmentRevenueDirect CostsMassages$500,000$300,000Facials$200,000$120,000Nail Services$80,000$50,000Sophia is considering converting the nail services area into an expanded massages area.Required: a....
- Q Mia's Music Store is analyzing the profitability of three segments: instruments, lessons, and accessories. The financials are:SegmentRevenueDirect CostsInstruments$500,000$300,000Lessons$200,000$120,000Accessories$80,000$50,000Mia is considering converting the accessories area into an expanded instruments area.Required: a. Determine...
- Q QRS Enterprises is considering two mutually exclusive projects. The company's cost of capital is 10% and the tax rate is 28%. Other information regarding both projects is as follows:ParticularsProject AProject...
- Q Hannah's Hardware is analyzing the profitability of three segments: tools, paint, and garden supplies. The financials are:SegmentRevenueDirect CostsTools$600,000$360,000Paint$150,000$90,000Garden Supplies$70,000$40,000Hannah is contemplating turning the garden supplies area into an expanded tools area.Required:...
- Q Delta Enterprises is considering two new projects with the following net cash flows. The company's required rate of return on investments is 8%. PV(0.08)PV(0.08)PV(0.08), FVA@8%FVA @ 8\%FVA@8%, PVA@8%PVA @ 8\%PVA@8%, FV@8%FV...
- Q George's Grill evaluates the profitability of three segments: restaurant, bar, and billiards. The financials are:SegmentRevenueDirect CostsRestaurant$320,000$200,000Bar$150,000$60,000Billiards$40,000$25,000George is considering converting the billiards area into an expanded bar area.Required: a. Based on segment...
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