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Question;3. (TCO 6) Yappy Company is considering a capital investment of $320,000 in additional equipment. The new equipment is expected to have a useful life of 8 years with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $25,000 and $65,000, respectively. Yappy requires a 10% return on all new investments.Part (a) Compute each of the following:1: Payback period.2: Net present value.3: Profitability index.4: Internal rate of return.5: Accounting rate of return.(b) Indicate whether the investment should be accepted or rejected. (Points: 30)4. (TCO 7) The management of Horton Company estimates that credit sales for August, September, October, and November will be $270,000, $375,000, $420,000, and $240,000, respectively. Experience has shown that collections are made as follows:In month of sales 25%In first month after sale 60%In second month after sales 10%Determine the collections from customers in October and November. Show all computations. (Points: 30)5. (TCO 8) Western Company?s budgeted and actual sales for 2009 were:Product Budgeted Sales Actual SalesA 10,250 units at $16.00 per unit 12,130 units at $15.60 per unitB 15,560 units at $12.00 per unit 12,940 units at $12.40 per unitPart (a) Calculate the sales volume variance.Part (b) Calculate the sales price variance.Part (c) Calculate the total sales variance. (Points: 30)6. (TCO 9) Mace Company accumulates the following data concerning a mixed cost, using miles as the activity level.Miles Driven Total CostJanuary 10,000 $15,000February 8,000 13,500March 9,000 14,400April 7,500 12,500Compute the variable and fixed cost elements using the high-low method. (Points: 30)


Paper#50938 | Written in 18-Jul-2015

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