# Page 3 20 the standard materials cost to produce 1

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20. The standard materials cost to produce 1 unit of Product M is 6 pounds of material at a standard price of \$50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of \$51 per pound. What is the overall direct material cost variance?
21. The Brown Company has decided to purchase some machinery that is expected to produce the following cash flows: \$8,000, \$6,000 and \$4,000 for years 1 through 3 respectively. Assuming interest at rate of 6 percent, what is the maximum amount the company should pay for the machinery? Answer 22. You recently borrowed \$32,000 to purchase a new car and agreed to make annual payments on your loan of \$6,713.52 for 6 years. What is the interest rate on your loan?
23. Coffer Company is analyzing two projects for the future. Assume that only one project can be selected. Project X Project Y Cost of machine \$68,000 \$60,000 Net cash flow: Year 1 24,000 4,000 Year 2 24,000 26,000 Year 3 24,000 26,000 Year 4 0 20,000 If the company is using the payback period method and it requires a payback of three years or less, which project should be selected?
24. Which of the following interest rates will produce the largest present value? A. 10% B. 5% C. 4% D. 2%
25. You are planning on buying a new boat in 4 years and want to have a \$5,000 down payment at that time. the bank pays interest of 3 percent, how much should you deposit in your account today to reach your goal? If Answer -- Page 4 --