Reference no: EM133189399
Questions -
Q1. A company plans to replace its existing machinery with a new one which costs $1,200,000. The old machinery was purchased at a cost of $1,200,000 and has an accumulated depreciation balance of $500,000. The new machine is estimated to be useful for 5 years. The remaining useful life of the old machinery is also 5 years. The old machinery can be sold now for $500,000. On the other hand, the new machinery has a resale value at the end of year 5 amounting to 10% of its cost. The annual cash savings from operations when the new machinery is used is $200,000.
Assuming a discount rate of 10%. Compute the net present value if the company will replace the old machinery.
A. $132,668
B. $178,160
C. $(367,332)
D. $(167,332)
Q2. MCQ Manufacturing Company produced and sold 200,000 units of Product J-45Z in January 2021.Selling price per unit is $70. The company incurred the following:
Direct materials cost - $20 per unit
Direct labor hours per unit - 0.5 hr/unit
Manufacturing overhead - $10/unit
If the manufacturing overhead is equal to 80% of direct labor rate per unit. How much is the total production cost in January?
A. $6,000,000
B. $7,600,000
C. $8,500,000
D. $9,200,000
Q3. Company A7 has the following balance sheet details as of December 31, 2020:
Beginning total assets - $5,000,000
Addition to total assets -$500,000
Deductions from total assets - $2,000,000
Net income- $3,500,000
Revenues - $8,500,000
Other gains- $2,500,000
What is the asset turnover ratio of Company A7?
A. 2.75
B. 2.20
C. 2.00
D. 1.60
Q4. The manufactùring costs of each uhit of Product Z are as follows:
Prime cost - $50
Direct material -$35
Conversion cost - $25
Manufacturing overhead - $10
What is the total manufacturing cost for the month of October when 500 units of Product Z are produced?
A. $30,000
B. $37,500
C. $35,000
D. $42,500
Q5. When the prevailing interest rate in the market is 8% and the stated interest rate in the bonds is 5%, investors would normally purchase the bonds at
A. Discount
B. Premium
C. Stated value
D. None of the above
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