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Tablerock Corp. is interested in reviewing its method of evaluating capital expenditure proposals using the accounting rate of return method. A recent proposal involved a $100,000 investment in a machine that had an estimated useful life of five years and an estimated salvage value of $10,000.The machine was expected to increase net income (and cash flows) before depreciation expense by $28,000 per year. The criteria for approving a new investment are that it have a rate of return of 12% and a payback period of three years or less.Required:
a. Calculate the accounting rate of return on this investment for the first year.Assume straight-line depreciation. Based on this analysis, would the investment be made? Explain your answer.b. Calculate the payback period for this investment. Based on this analysis, would the investment be made? Explain your answer.c. Calculate the net present value of this investment using a cost of capital of 12%.Based on this analysis, would the investment be made? Explain your answer.d. What recommendation would you make to the management of Tablerock Corp. about evaluating capital expenditure proposals? Support your recommendation with the appropriate rationale.
Journalize the entry to record the division of net income for 2014 under each of the independent assumptions - prepare a schedule the division of net income
Refer to Exercise 23-8. Hart Company records standard costs in its accounts and its material variances in separate accounts when it assigns materials costs to the Goods in Process Inventory account. In Exercise 23-8, Hart Company made 3,000 bookshelv..
The focus of management accounting over time has changed. Which is the correct historical order for the following foci?
required1. estimate the contribution to profit of a standard 180-guest cocktail party if chavez charges her usual price
Sunrise Company applies factory overhead based on direct labor costs.
Prepare a budgeted income statement for June and prepare a budgeted balance sheet as of June 30
Prepare the required journal entry based upon the cash count sheet.
Custom Shoes Co. has gathered the following information concerning one model of shoe:Variable manufacturing costs $50,000.
Do you believe that internal management accountants possess the degree of skill commonly possessed by outside accountants and auditors? Explain your reasoning.
Costs may be allocated to a product or activity for many purposes, but care must be exercised when using allocated costs because:
or what other business decisions may it be impossible to calculate the actual cost? What are some of the dangers of basing decisions on estimated rather than actual costs? How might these dangers be minimized?
Include an explanation of ethics in business and the managerial accountant's role in upholding the code of ethics.
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