Reference no: EM132959702

Assignment Question

Explanation and calculation working notes are must.

(i) On January 1, 2017, Zion Company borrowed 3,000,000 at an interest rate of 12%

specifically for the construction of a new building.

The actual interest cost on this specific borrowing was 336,000 but interest of 20,000 was earned from the temporary investment of the borrowing proceeds.

Zion company also had the following other loans in 2017 for general purposes but the proceeds were used in part for the construction of the building.

Principal Interest

10% bank loan 4,200,000 420,000

12% long term loan 7,000,000 840,000

The construction began on January 1, 2017 and was completed on December 31, 2017.

The expenditures on the construction were 3,000,000 on Jan. 1; 1,400,000 on March 31 and 4,200,000 on Sept.30.

How much is the general borrowing cost that must be capitalized?

(ii) Consider the going with declarations:

I. Gather all costs related with each choice being considered.

II. Crash those costs that are sunk.

III. Slaughter those costs that fluctuate between choices.

Which of the above statements doesn't address

a phase in perceiving the significant costs in a decision issue?

a. Just I

b. Simply II

c. Simply III

d. Just I and III

(iii) Which of the going with livelihoods is material in a decision about enduring Alternative X or Alternative Y?

a. a cash inflow for Alternative X that isn't a cash inflow for Elective Y.

b. a cash inflow that is lost if Alternative X is recognized and isn't lost if Elective Y is recognized.

c. a cash flood that is avoided if Alternative X is recognized likewise, isn't avoided if Alternative Y is recognized.

d. the sum of the previously mentioned

(iv) Which of the going with best depicts an opportunity cost:

a. it is a pertinent cost in powerful, anyway isn't fundamental for the traditional accounting records

b. it's definitely not an appropriate cost in unique, yet is significant for the ordinary accounting records.

c. it is a pertinent cost in unique, and is fundamental for the ordinary accounting records.

d. it's definitely not a pertinent cost in unique, and isn't part of the regular accounting records.

(v) The affirmation of a remarkable solicitation will improve as a rule net working compensation so long as the pay from the unprecedented solicitation outperforms:

a. the responsibility edge on the solicitation.

b. the consistent costs related with the solicitation

c. the variable costs related with the solicitation.

d. the sunk costs related with the solicitation.

(vi) Kinsi Corporation makes five exceptional things. All of the five of these things must go through a venturing machine in its creation office.

This machine is Kinsi's obliged resource.

Kinsi would make the most advantage if it conveys the thing that:

a. uses the most un-number of venturing machine hours.

b. makes the most vital responsibility edge per unit.

c. makes the most important responsibility edge extent.

d. makes the most important responsibility edge per venturing machine hour.

(vii) Which of coming up next is positively not a vital nature of huge information?

a. Ought to be connected with the decision suitable

b. Ought to have a relationship with or bearing on some future endeavor

c. Ought to be basic to the pioneer

d. Ought to be clear by a self-sufficient reporter or evaluator

(viii) Full scale unit costs are:

a. critical for cost-volume-advantage assessment.

b. needed for choosing sunk costs.

c. non-material in minor assessment.

d. needed for choosing thing responsibility.

(ix) In gear replacement decisions,

which one of the going with doesn't impact the dynamic cycle?

a. Recorded cost of the old stuff

b. Cost of the new equipment

c. Working costs of the new stuff

d. Current expulsion cost of the old stuff

(x) Select some unacceptable clarification from the going with.

a. A cost that is something basically the same for different decisions under thought isn't material.

b. The cost of getting the machine that is correct now used to produce a part is huge in making a rethinking decision.

c. The cost to get a portion in a make or buy decision is significant.

d. The salvage or extra worth of a piece of mechanical assembly is appropriate in a keepor-override decision.