roduct A requires 6 machine hours per unit to be produced, Product B requires only 4 machine hours per unit, and the company’s productive capacity is limited to 240,000 machine hours. Product A sells for $18 per unit and has variable costs of $7 per unit. Product B sells for $16 per unit and has variable costs of $5 per unit. Assuming the company can sell as many units of either product it produces, the company should…

Produce A and B in the ratio of 61% A to 39% B.

Produce only Product B.

Produce equal amounts of A and B.

Produce only Product A.

Produce A and B in the ratio of 89% A and 11% B.

Rocko Inc. has a machine with a book value of $55,000 and a five year remaining life. A new machine is available at a cost of $90,000 and Rocko can also receive $43,000 for trading in the old machine. The new machine will reduce variable manufacturing costs by $14,500 per year over its seven year life. Should the machine be replaced?

Yes, because income will increase by $14,500 per year.

No, because the company will be $54,500 worse off.

Rocko will be not be better or worse off by replacing the machine.

Yes, because income will increase by $54,500.

No, because the income will decrease by $14,500 per year.

A given project requires a $29,200 investment and is expected to generate end-of-period annual cash inflows of $12,700 for each of three years. Assuming a discount rate of 12%, what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below.

i = 12% i = 12% i = 12%

n¯1 n¯2 n¯3

.8929 .7972 .7118

$1,304.13

$2,630.53

$30,504.13

($7,498.47)

$0.00

## Accounting Help Please Explain To Me?

May 6th, 2013 admin