ch13-AFM102s2012

ch13-AFM102s2012 - 13-1 MANAGERIAL ACCOUNTING Ninth...

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Managerial Accounting 13-1 PowerPoint Author: Robert G. Ducharme, MAcc, CA University of Waterloo, School of Accounting and Finance MANAGERIAL ACCOUNTING Ninth Canadian Edition GARRISON, CHESLEY, CARROLL, WEBB, LIBBY Capital Budgeting Decisions Chapter 13
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13-2 Managerial Accounting Typical Capital Budgeting Decisions Production equipment/facilities replacement or upgrades May include alternatives Expansion of operations Cost reduction alternatives Non-manufacturing Computer system replacements/upgrades lease vs. buy decisions Capital budgeting tends to fall into two broad categories . . . Capital budgeting tends to fall into two broad categories . . . Screening decisions Screening decisions . Does a proposed project meet some Does a proposed project meet some present standard of acceptance? present standard of acceptance? Preference decisions . Selecting from among several competing Selecting from among several competing courses of action. courses of action. Capital budgeting tends to fall into two broad categories . . . Capital budgeting tends to fall into two broad categories . . . Screening decisions . Does a proposed project meet some Does a proposed project meet some present standard of acceptance? Preference decisions Preference decisions . Selecting from among several competing Selecting from among several competing courses of action.
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13-3 Managerial Accounting Approaches to Capital Budgeting Decisions Two methods of making capital budgeting decisions Two methods of making capital budgeting decisions include . . . include . . . The Payback Method. The Payback Method. Simple Rate of Return. Simple Rate of Return. Two methods of making capital budgeting decisions Two methods of making capital budgeting decisions include . . . include . . . The Payback Method. The Payback Method. Simple Rate of Return. Simple Rate of Return.
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13-4 Managerial Accounting The Payback Method The payback period is the length of time that it takes for a project to recover its initial cost out of the cash receipts that it generates. When the net annual cash inflow is the same each year, this formula can be used to compute the payback period: The payback period is the length of time that it takes for a project to recover its initial cost out of the cash receipts that it generates. When the net annual cash inflow is the same each year, this formula can be used to compute the payback period: Payback period = Investment required Net annual cash inflow
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13-5 Managerial Accounting The Payback Method Management at The Daily Grind wants to install an Management at The Daily Grind wants to install an espresso bar in its restaurant. espresso bar in its restaurant. The espresso bar: The espresso bar: 1. 1. Costs $140,000 and has a 10-year life.
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ch13-AFM102s2012 - 13-1 MANAGERIAL ACCOUNTING Ninth...

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