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Asempa Ltd reported GH¢ 28,000 operating profit for the year using variable costing. The company had...

Asempa Ltd reported GH¢ 28,000 operating profit for the year using variable costing. The company had no beginning inventory and the production (actual and planned) was 30,000 units and sales of 25,000 units. Standard variable manufacturing costs were GH¢15 per unit and total budgeted fixed manufacturing overhead was GH¢150,000. Ignoring any variances between actual and standard costs, by how much would operating profit be under absorption costing?

Select one:

a. GH¢25,000 higher.

b. No difference.

c. GH¢2,000 higher.

d. GH¢25,000 lower.

ABC Company is considering a long-term capital investment project in laser equipment. This will require an investment of GH¢ 280,000, and it will have a useful life of 5 years. Annual net income is expected to be GH¢ 16,000 a year. Depreciation is computed by the straight-line method with no salvage value. The company’s cost of capital is 10% (DF@ N=5, 10% = 3.791). On the basis of a net present value analysis, the investment should be accepted.

Select one:

a. False

b. True

The Madina Electrical Repair Shop has decided to price its work on a time-and-material basis. It estimates the following costs for the year related to labor. Technician wages and benefits GH¢ 100,000; office employee’s salary and benefits GH¢ 40,000; other overhead GH¢ 80,000. Madina desires a profit margin of GH¢ 10 per labor hour and budgets 5,000 hours of repair time for the year. The office employee’s salary, benefits, and other overhead costs should be divided evenly between time charges and material loading charges. Madina labor charge per hour would be:

Select one:

a. GH¢ 42.

b. GH¢ 30.

c. GH¢ 32.

d. GH¢ 34.

Which of the following is not true regarding the internal rate of return for a project?

Select one:

a. If the internal rate of return is less than the required rate of return, the project will be rejected

b. If the internal rate of return is equal to the required rate of return, the net present value of the project is zero.

c. If the present value of a project's cash inflows equal to the present value of a project's cost.

d. If the internal rate of return is more than the required rate of return, the project will be rejected

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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