What is meant by classifying a unit as an “investment center” vs. a “cost” or “profit” center? Discuss how each of the following tools, individually and/or collectively, can and should be used to evaluate managers of such “investment center” individual divisions of a large organization: ROI, EVA, and the Balanced Scorecard. (Hint: discuss how each works, what each helps ensure, what dysfunctional behaviors can result from its use, and how multiple approaches can help ensure behavior that aligns individual incentives with overall corporate strategy.)
In: Accounting
In 2008, a project requires an initial cost of -$250 and next year, in 2009, the investor receives $570 and the year after that, in 2010, the cash flows from the investment is -$120. What is the total number of IRRs in this project?
|
1 |
||
|
0 |
||
|
2 |
||
|
3 |
What is the NPV of a project if IRR < discount rate (Assuming that the first cash flow is negative and all of the cash flows from the project are positive)?
|
< 0 |
||
|
> 0 |
||
|
= 0 |
||
|
None |
Which of the following method must be preferred if the number changes in the signs of future cash flows within the project’s economic life is more than one?
|
IRR |
||
|
Payback Period |
||
|
Discounted Payback Period |
||
|
NPV |
In: Finance
The inventory records of Frost Company for the years 2016 and 2017 reveal the cost and market of the January 1, 2016, inventory to be $125,000. On December 31, 2016, the cost of inventory was $130,000, while the market value was only $128,000. The December 31, 2017, market value of inventory was $140,000, and the cost was only $135,000. Frost uses a perpetual inventory system.
| Required: | |||||
| 1. | Assume the inventory that
existed at the end of 2016 was sold in 2017. Prepare the journal
entries at the end of 2016 and 2017 to record the lower of cost or
market under the:
|
||||
| 2. | Show the presentation of cost
of goods sold and inventory on Frost’s income statement and balance
sheet for 2016 and 2017 under the:
|
In: Accounting
Alex is going to work for a company for 1 year. The estimated cost of lunch for Alex is about $250 per month. The company has two options for his lunches:
Option 1) Company has a restaurant and Alex can use the restaurant by a provided card from company with no cost on Alex (Lunch is on company).
Option 2) Company will pay Alex $120 monthly and $1500 at the beginning of the year and then lunch will be on Alex.
If the interest rate is 8%, which option is more beneficial for Alex?
In: Finance
Jenny constructed a building for use as a residential rental property. The cost of the building was $82,488, and it was placed in service on August 1, 1997. The building has a 27.5-year MACRS life. What is the amount of depreciation on the building for 2019 for tax purposes?
In: Finance
You are considering making a movie. The movie is expected to cost $ 10.5million upfront and take a year to produce. After that, it is expected to make $ 4.5 million in the year it is released and $ 1.9 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10.6%
In: Finance
A medical researcher surveyed 15 hospitals and found that the standard deviation for the cost for removing a person's gall bladder was $ 50. Assume that the variable is normally distributed. Based on this, what is the 90% confidence interval of the population variance?
In: Statistics and Probability
| Select either true or false for the following statements |
| 1. | An opportunity cost is the potential benefit that is lost by taking a specific action when two or more alternative choices are available. | (Click to select)FalseTrue |
| 2. | A sunk cost will change with a future course of action. | (Click to select)TrueFalse |
| 3. | An out-of-pocket cost requires a current and/or future outlay of cash. | (Click to select)FalseTrue |
| 4. | Relevant costs are also known as unavoidable costs. | (Click to select)FalseTrue |
| 5. | Incremental costs are also known as differential costs. | (Click to select)TrueFalse |
In: Accounting
Cost behavior refers to:
A.Costs that are both good and bad.
B.Costs that are variable or fixed.
C.Costs that decrease at a quicker rate than others.
D.Costs that increase at a quicker rate than others.
E.None of these.
In: Accounting
The inventories of Berry Company for the years 2016 and 2017 are as follows:
| Cost | Market | |
|---|---|---|
| January 1, 2016 | $10,000 | $10,000 |
| December 31, 2016 | 13,000 | 11,500 |
| December 31, 2017 | 15,000 | 14,000 |
Berry uses a perpetual inventory system.
| Required: | |||||
| 1. | Assume the inventory that
existed at the end of 2016 was sold in 2017. Prepare the necessary
journal entries at the end of each year to record the correct
inventory valuation if Berry uses the:
|
||||
| 2. | Next Level Explain any differences in inventory valuation and income between the two methods. |
In: Accounting