Reference no: EM13861667

Problem 1: Tom Bat became a baseball enthusiast at a very early age. All of his baseball experience has provided him valuable knowledge of the sport, and he is thinking about going into the batting cage business. He estimates that the construction of a state-of-the-art building and the purchase of necessary equipment will cost $630,000. Both the facility and the equipment will be depreciated over 12 years using the straight-line method and are expected to have zero salvage values. His required rate of return is 10%. Estimated annual net income and cash flows are $49,000 and $101,500, respectively.

For this investment, calculate the following.

Part (a): the net present value

Part (b): the internal rate of return

Part (c): the payback period

Problem 2: Roswell Company has budgeted sales revenue as follows for the next 4 months as follows.

February	$150,000
March	$120,000
April	$105,000
May	$165,000

Past experience indicates that 80% of sales each month are on credit and that collection of credit sales occurs as follows: 60% in the month of sale, 35% in the month following the sale, and 3% in the second month following the sale. The other 2% is uncollectible.

Prepare a schedule which shows expected cash receipts from sales for the month of May.

Problem 3: Northern Company's budgeted and actual sales for 2009 were as follows.

Product	Budgeted Sales	Actual Sales
A	6,000 units at $8.00 per unit	6,810 units at $7.80 per unit
B	5,000 units at $10.00 per unit	4,720 units at $10.40 per unit

Part (a): Calculate the sales volume variance.

Part (b): Calculate the sales price variance.

Part (c): Calculate the total sales variance.

Problem 4: Herbart Company gathered the following information on power costs and factory machine usage for the last 6 months.

	Power Cost	Factory Machine Hours
January	$24,400	13,900
February	30,300	17,600
March	29,000	16,800
April	22,340	13,200
May	19,900	11,600
June	14,900	6,600

Using the high-low method of analyzing costs, answer the following questions and show computations to support your answers.

Part (a): What is the estimated variable portion of power costs per factory machine hour?

Part (b): What is the estimated fixed power cost each month?

Part (c): If it is estimated that 10,000 factory machine hours will be run in July, what is the expected total power cost for July?