1
Which of the following illustrates a purpose for allocating costs to cost objects?
A) to defer income and reduce taxes payable
B) to determine employee benefit costs
C) to motivate employees
D) to provide information for economic decisions
e) to reduce competition
2
The belief that corporate division with higher sales out to be allocated more of the company's advertising costs because it must of derived more benefit from the expenditures then a division with lower sales, is an example of which criteria for cost allocations decisions
A) fairness and equality
B) benefits receivied
C) cause and effect
D) ability to bear
E) benefits expended
3
Which cost allocation method differentiates between variable and fixed costs?
A) Heterogenous method
B) Single-rate method
C) variable method
D) Dual rate method
E) fixed rate method
In: Accounting
Which of the following is an appropriate definition of reduced cost?
| The amount by which a constraint right-hand side must increase in order to get a unit increase in the objective function. |
| The amount an objective function coefficient must change in order for its associated decision variable to take on a value above its lower bound (0 in most cases). |
| The amount by which the objective function will change if a constraint right-hand-side is increased by one unit. |
| The amount by which a constraint right-hand-side must change in order to get the associated decision variable to take on a value above its lower bound. |
In: Finance
An important application of regression analysis in accounting is
in the estimation of cost. By collecting data on volume and cost
and using the least squares method to develop an estimated
regression equation relating volume and cost, an accountant can
estimate the cost associated with a particular manufacturing
volume. Consider the following sample of production volumes and
total cost data for a manufacturing operation.
| Production Volume (units) | Total Cost ($) |
| 400 | 4,100 |
| 450 | 5,100 |
| 550 | 5,500 |
| 600 | 6,000 |
| 700 | 6,500 |
| 750 | 7,100 |
In: Statistics and Probability
An important application of regression analysis in accounting is
in the estimation of cost. By collecting data on volume and cost
and using the least squares method to develop an estimated
regression equation relating volume and cost, an accountant can
estimate the cost associated with a particular manufacturing
volume. Consider the following sample of production volumes and
total cost data for a manufacturing operation.
| Production Volume (units) | Total Cost ($) |
| 400 | 4,400 |
| 450 | 5,400 |
| 550 | 5,800 |
| 600 | 6,300 |
| 700 | 6,800 |
| 750 | 7,400 |
In: Statistics and Probability
An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation.
Production Volume (units) Total Cost ($)
| 400 | 5000 |
| 450 | 6000 |
| 550 | 6400 |
| 600 | 6900 |
| 700 | 7400 |
| 750 | 8000 |
In: Statistics and Probability
An important application of regression analysis in accounting
is in the estimation of cost. By collecting data on volume and cost
and using the least squares method to develop an estimated
regression equation relating volume and cost, an accountant can
estimate the cost associated with a particular manufacturing
volume. Consider the following sample of production volumes and
total cost data for a manufacturing operation.
|
In: Statistics and Probability
An important application of regression analysis in accounting is
in the estimation of cost. By collecting data on volume and cost
and using the least squares method to develop an estimated
regression equation relating volume and cost, an accountant can
estimate the cost associated with a particular manufacturing
volume. Consider the following sample of production volumes and
total cost data for a manufacturing operation.
| Production Volume (units) | Total Cost ($) |
| 400 | 3,500 |
| 450 | 4,500 |
| 550 | 4,900 |
| 600 | 5,400 |
| 700 | 5,900 |
| 750 | 6,500 |
In: Statistics and Probability
Heinlein Inc is considering investing in a project with a cost of $100k. The project is expected to produce cash flows of $50 in year 1, 80 in year 2, and 215 in year 3. If the discount rate is 0.09 what is the discounted payback period.
In: Finance
veal corporation bought a machine at the beginning of the year at the cost of $18,600. The estimated useful life was ten years, and the residual value was $600. Assume that the estimated productive life of the machine is 100,000 units. Annual production for the first 3 years was: 35,000 units in year 1: 25,000 units in year 2: and 18,000 units in year 3.
What is the deprecation cost of the machine? Using the
straight-line method what is the deprecation cost reported in
year1? What is the book value at the end of year 2. Using the units
of production method, what is the depecation cost for year 1? Using
the double declining balance method, what is the book value at the
end of year 1?
In: Accounting
A corporation is trying to raise money for a business expansion. The total cost of the expansion is $1,000,000. The expected return on assets before taxes of the business expansion project is 10% on the total asset investment. (Expected probabilities of returns are .25 of an 8% return, .5 of a 10% return and .25 of a 12% return.)
After the privately held corporation owners are considering two options which involve obtaining one of two types of loans from an area bank. The current individual stock investors will put in the needed additional equity investment capital for the expansion project.
Loan option 1: The bank is willing to lend 60% of the $1,000,000 project with a 7 year interest only loan at an annual contract rate of 8% with interest payable quarterly and a balloon note payment at the end of 7 years. The loan closing costs will be 4% of the amount borrowed and the owners will be held personally responsible for the loan. The closing costs fees must be paid in cash when the loan contract is signed and begins.
Loan option 2: The bank is also willing to lend 70% of the $1,000,000 project with a 7-year interest only loan at an annual contract rate of 9% with interest payable quarterly and a balloon note payable at the end of 7 years. The loan closing cost is 5% of the amount borrowed and the owners will also be held personally responsible for the loan. The set up fees must be paid in cash when the loan contract is signed and begins.
To assist in this financial decision making situation, calculate the follow:
What is the APR for each loan?
Option 1 _________
Option 2 ___________
If Option 2 is selected, what is the incremental cost of borrowing the additional amount of money?
Incremental Cost of Borrowing ________________%
What is the expected return on investment for this business expansion project for each option of financing this expansion project?
ROE if Option 1 is used? __________
ROE if Option 2 is used? ___________________
Which option do you recommend and why?
In: Finance