The Blending Department of Luongo Company has the following cost and production data for the month of April. Costs: Work in process, April 1 Direct materials: 100% complete $125,000 Conversion costs: 20% complete 87,500 Cost of work in process, April 1 $212,500 Costs incurred during production in April Direct materials $1,000,000 Conversion costs 456,250 Costs incurred in April $1,456,250 Units transferred out totaled 21,250. Ending work in process was 1,250 units that are 100% complete as to materials and 40% complete as to conversion costs. Compute the equivalent units of production for (1) materials and (2) conversion costs for the month of April. Compute the unit costs for the month. (Round unit costs to 0 decimal places, e.g. 25.) Compute the unit costs for the month. (Round unit costs to 0 decimal Places Determine the costs to be assigned to the units transferred out and in ending work in process. (Round answers to 0 decimal places, e.g. 1,225.)

You have been given a project to evaluate. The upfront cost is $100,000. The project will then generate $40,000 in year one, $50,000 in year two, and then $60,000 for the last 3 years of the project. If your cost of capital is 11%, what is the NPV? IRR? Show Calculations.

During the month of January, Sundown Corporation had sales of $580,000 and a cost of goods available for sale of $1,160,000. The company consistently earns a gross profit rate of 49%. Using the gross profit method, the estimated inventory at January 31 amounts to:

$295,800.

$864,200.

$284,200.

$875,800.

A firm is considering investing in a new project. According to its cost of capital while using debt, preferred stock and new common stock, the project is expected to have an initial after-tax cost of $5,000,000. Furthermore, the project is expected to provide after-tax operating cash flows of $1,800,000 in year 1, $2,900,000 in year 2, $2,700,000 in year 3 and $2,300,000 in year 4. A firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions. Source of Capital Target Market Proportions Long-term debt 40% Preferred stock 10% Common stock equity 50% Debt: The firm can raise debt by selling 15-year, $1,000 par value, 9% coupon interest rate bonds that pay annual interest. A flotation cost of 4 percent of the face value would be required in addition to the premium of $10. Preferred Stock: Preferred stock, regardless of the amount sold, can be issued with an $80 par value and a 12% annual dividend rate. The cost of issuing and selling the stock is $3 per share. Common Stock: The firm’s common stock is currently selling for $10 per share. The dividend that was paid last year was $0.87. Its dividend payments have been growing at a constant rate of 5% per year. It is expected that to attract buyers, a new common stock issue must be underpriced $2 per share, and the firm must also pay $1 per share in flotation costs. Retained Earnings: A corporation expects to have earnings available to common shareholders (net income) of $1,000,000 in the coming year. The firm plans to pay 40 percent of earnings available in cash dividends. The retained earnings have been already exhausted. Therefore, the firm will use new common stock as the form of common equity financing. Additionally, the firm’s marginal tax rate is 40 percent.

(a) Maximum acceptable payback period of this project is 3 years. Calculate the payback period for this project.

(b) Calculate the project’s NPV.

(c) Calculate the project’s IRR.

(d) Should the firm make the investment? Why?

Entries for Sale of Fixed Asset

Equipment acquired on January 8 at a cost of $170,450 has an estimated useful life of 20 years, has an estimated residual value of $7,450, and is depreciated by the straight-line method.

a. What was the book value of the equipment at December 31 the end of the fourth year?
$fill in the blank 6f412ff47fb6faf_1

b. Assume that the equipment was sold on April 1 of the fifth year for $130,562.

1. Journalize the entry to record depreciation for the three months until the sale date. If an amount box does not require an entry, leave it blank. Round your answers to the nearest whole dollar if required.

2. Journalize the entry to record the sale of the equipment. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations.

Equipment acquired on January 6 at a cost of $335,190, has an estimated useful life of 13 years and an estimated residual value of $68,690.

Required:

Chart of Accounts

First Questions

a. What was the annual amount of depreciation for Years 1-3 using the straight-line method of depreciation?

b. What was the book value of the equipment on January 1 of Year 3?

Journal

c. Assuming that the equipment was sold on January 3 of Year 4 for $256,655, journalize the entry to record the sale. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

A report States that the cost of repairing a hybrid vehicle is falling even while typical repairs on conventional vehicles are getting more expensive. The most common hybrid repaired replacing the hybrid Inverter assembly had a mean repair cost of 3927 in 2012. Industry experts suspect that the cause will continue to decrease given the increase in a number of technicians who have gained expertise on fixing gas electric engines in recent months. Suppose a sample of 100 hybrid inverter assembly repairs completed in the last month was selected. The sample mean repair cost was $3780 with a sample standard deviation of $600. Complete parts A and B below.

a. is there evidence that the population mean cost is less than $3,927? (use a 0.05 level of significance)
state the null and alternative hypothesis.

-find the test statistic for this hypothesis test.
(round to two decimal places as needed)

-The critical value for the test statistics is/are...
(round to two decimal places and use commas to separate answers)

b. determine the p-value
(round to three decimal places as needed)

A consumer advocate agency wants to find the mean repair cost of a washing machine. As part of the study 40 repair costs were selected and the mean repair cost was determined to be $150.00. From past studies the agency assumes that σ = $21. Construct a 90% confidence interval for the population mean. (Round confidence interval values to two decimal places.)

The mean cost of domestic airfares in the United States rose to an all-time high of $375 per ticket. Airfares were based on the total ticket value, which consisted of the price charged by the airlines plus any additional taxes and fees. Assume domestic airfares are normally distributed with a standard deviation of $100. Use Table 1 in Appendix B.

a. What is the probability that a domestic airfare is $540 or more (to 4 decimals)?

b. What is the probability that a domestic airfare is $265 or less (to 4 decimals)?

c. What if the probability that a domestic airfare is between $320 and $480 (to 4 decimals)?

d. What is the cost for the 5% highest domestic airfares? (rounded to nearest dollar)