ACCT 301 Week 5, 6 and 7 Homework Problems

ACCT 301 Week 5

Problem 1

Required: Identify each of the following as either a direct or indirect cost.(20 points)

Direct or Indirect? 

Material used in production

Salary of manufacturing supervisor

Wages of manufacturing worker

Telephone costs

Rent

Problem 2

Required: GH Company is trying to decide whether to replace a current piece of machinery with a new machine. Using the below data, determine the relevant costs of the old machine and the new machine. Should GH Company purchase the new machine?(30 points)

Old MachineNew machine

Original cost 100,000

Accumulated depreciation (50,000)

Book value 50,000

Market value (now) 25,000 30,000

Salvage value (in 5 years) 5,000 8,000

Annual depreciation expense 11,000

Operating expenses

   Per year 9,000 4,500

   Times number of years 4 4

Total operating expenses 36,000 18,000

ACCT 301 Week 6 Homework Problems

Problem 1

Required: In the space below, describe the advantages of budgeting.(10 points)

Problem 2

"Required: Compute the ROI for each division below to two decimal places. (30 points)

Which division has the best performance? (10 points)"

(40 points total)

Division ADivision BDivision C

Operating income 245,000 125,000 350,000 

Operating assets 1,200,000 775,000 1,500,000 

ACCT 301 Week 7 Homework Problems

Problem 1

Required: In the space below, describe the net present value method of capital budgeting. (10 points)

Problem 2

"Required: Compute the average annual cash inflows. (20 points)

Compute the payback period using the accumulation method. (20 points)"

(40 points total)

20132014201520162017

Incremental revenue 6,000 2,000 4,000 2,000 1,000 

Cost of new machine 12,000

 Compute the average annual cash inflows