Shell City considers 2 projects using the cost of capital of 12%. Project Sponge: cost $10,000, cash flows of $4,300; $5,200, and $4,700 in 3 years respectively. Project Whale: cost $14,000, cash flows of $5,600; $4,100; $6,500; and $5,300 in 4 years respectively. What is the equivalent ANPV of Project Sponge?

$811.26

$1,330.06

$450.68

$553.77

What is the equivalent ANPV of Project Whale?

$821.44

$610.52

$745.16

$418.90

Assume the following unit‑cost data are for a purely competitive producer:

1. At a product price of $32, will this firm produce in the short run? Why, or why not? If it does produce, what will be the profit‑maximizing or loss‑minimizing output? Explain. What economic profit or loss will the firm realize per unit of output.

Cost Behavior and Cost-Volume-Profit (CVP) Analysis are very important and useful concepts and tools used by management and other decision-makers. CVP analysis and one's understanding of cost behavior is helpful for business planning and controlling purposes.

Due to the temporary downturn in the economy, sales revenues have decreased by 50% to 60% for many restaurants and eateries, retails stores and service-oriented businesses (e.g., hair salons ) thus affecting profitability and the ability to continue business operations.  In order to survive the slowdown, businesses must make some adjustments or risk going out of business.

1. As a consultant, which of the Cost-Volume-Profit techniques and tools would you use to help these businesses make decisions? Assume the business is a restaurant. Briefly explain your choice(s).
2. In term of actions involving cost reduction or increasing revenues, briefly provide some recommendations for these businesses to help them stay profitable or at least minimize losses during this period? (Be specific).. Hint: Think about what some business have been doing to control their costs and generate other streams of revenues.

When calculating payback period, is training cost treated as initial investment cost or one time expense cash outflow? What formula is used to calculate payback period?

Variable Cost Methodof Product Pricing

Smart Stream Inc. uses the variable cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cell phones are as follows:

Smart Stream desires a profit equal to a 30% return on invested assets of $1,200,000.

a. Determine the variable costs and the variable cost amount per unit for the production and sale of 10,000 cellular phones.

b. Determine the variable cost markuppercentage for cellular phones. Round to two decimal places.
%

c. Determine the selling price of cellular phones. If required, round to the nearest dollar.
$per cellular phone

Smart Stream Inc. uses the total cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 7,500 units of cell phones are as follows:

Smart Stream desires a profit equal to a 14% return on invested assets of $952,710.

a. Determine the total cost and the total cost amount per unit for the production and sale of 7,500 units of cellular phones. Round the cost per unit to two decimal places.

b. Determine the total cost markup percentage (rounded to two decimal places) for cellular phones.
%

c. Determine the selling price of cellular phones. Round to the nearest cent.
$ per cellular phone

Assembly Department uses a process cost accounting systm and a weighted-average cost flow assumption. The department adds minerals at the beginning of the process and incur conversion costs uniformly throughout the process. During July, $190,000 of materials cost and $135,000 in conversion costs were charged to the department. The beginning work in process inventory was $93,000 on July 1, comprised of $80,000 of materials costs and $13,000 of conversion costs.

Other Data for the month of July are as follows:
Beginning work in process Inventory 7/1    25,000 units (40% complete)
Units completed and transferred out. 90,000 units
Ending work in process inventory 7/31       30,000 units (30% complete)

Instructions
1. How many physical units have to be accounted for in July?
2. What are the equivalent units of production for materials and for conversion costs for the month of July?
3. What is the total cost assigned to the 90,000 units that were transferred out of the process in July?
4. What is the remaining total cost of inventory within the Assembly department as of July 31?

FQ3. Annual demand is 12500 units, cost per order is $60 and carrying cost per unit as a    percentage is 8%. The company works 50 weeks a year; the lead-time on all orders placed is 5 weeks.

1. Assuming constant lead-time demand, and a unit cost of $40 what is the economic order quantity? What is the reorder point.
2. If lead-time demand shows variability that follows a normal distribution with a mean μ =280 and a standard deviation σ =20, what will the revised reorder point if two stock-outs (shortages) are allowed?
3. What is the company’s reorder point if the probability of a stock-out on any cycle is restricted to 0.05?

1. List 5 ways that managerial accountants use cost information from cost systems in making decisions: