ABC Inc. is considering a project that will cost $60 million. The cost of capital for this type of project is 10%, and the risk-free rate is 6%. The project will generate the following cash flows every year for the next two years. Assume that there is a 30% chance of high demand with associated future cash flows of $45 million per year. There is also a 40% chance of average demand with cash flows of $30 million per year as well as a 30% chance of low demand with cash flows of only $15 million per year. Assume that the project has an investment timing option because it can be delayed for a year. The cost will still be $60 million at the end of the year, and the cash flows for the three scenarios will still last 2 years. However, Tropical Sweets will know for sure the level of demand one year from now and implement the project only if the demand is high or average with a positive NPV. Answer the following three questions: 1) What is the NPV of the project without the timing option? 2) What is the NPV of the project with the investment timing option? 3) Should the firm delay the implementation of the project one year?

A. 1) ($7.93); 2) $4.32; 3) Yes

B. 1) $14.61; 2) $12.75; 3) No

C. 1) $4:61; 2) $11.56; 3) Yes

D. 1) ($7.93); 2) $2.22; 3) No

Which of the following would be classified as an appraisal cost on a quality cost report?

Multiple Choice

• Test and inspection of in-process goods.

• Technical support provided to suppliers.

• Debugging software errors.

• Audits of the effectiveness of the quality system.

1) The cost of quality training is an example of what type of quality cost?

A) External failure costs

B) Internal failure costs

C) Appraisal or inspection costs

D) Prevention costs

2) Which of the following statements is correct about the differences between a volume-based cost system and an ABC system?

A) The only difference is how the methods assign direct costs to products.

B) The only difference is how the methods assign indirect costs to products.

C) There is no difference in how the methods assign direct or indirect costs to products.

D) The methods assign both direct and indirect costs differently to products.

If an MRI machine has an appraisal cost of $6,250, a historical cost of $2,785, and a depreciation expense of $96, what is its restated depreciation expense (1 point)?

Cost of quality includes all of the following EXCEPT:

If a firm has a total fixed cost of $75 and an average variable cost of $35 for producing 10 units of output, the average total cost would be:

If a firm has an average total cost of $55 and an average fixed cost of $10 for producing 5 units of output, then the total variable cost will be:

From the following, calculate the cost of ending inventory and cost of goods sold for the weighted-average method, ending inventory is 56 units. (Round your intermediate calculations and final answers to the nearest cent.)

cost of ending inventory?

Cost of good sold?

From the following, calculate the cost of ending inventory and cost of goods sold for the LIFO method, ending inventory is 54 units. (Round your answers to the nearest cent.)

Calculate the cost of goods sold and the cost of the ending inventory using the LIFO periodic cost flow assumption.

Sales 97 units at $ 18 per unit

Beginning inventory 88 units at $ 6 per unit

Purchases 58 units at $ 10 per unit

Calculate the cost of goods sold using the LIFO periodic cost flow assumption. Units x Cost per Unit = Total Cost Units from beginning inventory x = Units from purchase x = Cost of Goods Sold - LIFO method Calculate the cost of the ending inventory using the LIFO periodic cost flow assumption. ?(Enter 0's for any layers where there were no units? sold.) Units x Cost per Unit = Total Cost Units from beginning inventory x = Units from purchase x = Ending Inventory - LIFO method