1. Juro Supply forecasts purchases of 12,200 units in June. It sells each unit for $10.50. The firm has 1,000 units on hand on June 1. The desired ending inventory on June 30th is to be 20% higher than beginning inventory. Total dollar sales for June is expected to be:

a. $119,700

b. $126,000

c. $128,100

d. $130,200

2. Allen Co.'s sales are 10% cash and 90% on credit. Credit sales are collected as follows: 30% in month of sale, 50% the next month, 20% in the following month. On 12/31, the accounts receivable balance is $54,000, of which $12,000 is from November sales. Total sales for January are budgeted to be $100,000. Cash receipts budgeted for January total:

a. $70,000

b. $70,400

c. $74,000

d. $79,000

3. A boat costs $108,00 and, uninsured, was wrecked the first day it was used. It either can be disposed for $11,000 cash and replaced with a similar boat costing $110,000, or rebuilt for $98,000 and be brand new as far as operating characteristics and looks are concerned. The net relevant cost of replacing the boat is:

a. $ 87,000

b. $ 97,000

c. $ 99,000

d. $110,000

4. The relevant cost of rebuilding the boat described in the above question is:

a. $ 97,000

b. $ 98,000

c. $ 99,000

d. $110,000

5. Omaha Plating Corporation is considering purchasing a machine for $1,500,000. The machine will generate a net after-tax income of $100,000 per year for 15 years. The firm will use straight-line depreciation for the new machine over 10 years with no residual value. What is the payback period for the new machine?

a. 4 years

b. 5 years

c. 6 years

d. 10 years

e. 15 years

6. Carmino Company is considering an investment in an asset that generates net after-tax income of $6,000 at the end of each year of its four-year life. The asset has no salvage value. The firm is in the 40% tax bracket. The book values of the investment at the beginning of each year are:

Year 1-$30,000; Year 2 -$15,000; Year 3 -$7,500; Year 4 -$3,750

The asset's book rate of return on average investment is:

a. 12%

b. 27%

c. 36%

d. 43%

USE THE ABOVE QUESTION TO ANSWER THE FOLLOWING ONE.

7. The amount of after-tax net cash inflow from the asset in Year 3 is:

a. $ 6,000

b. $ 7,500

c. $ 8,100

d. $13,500

1. Juro Supply forecasts purchases of 12,200 units in June. It sells

each unit for $10.50. The firm has 1,000 units on hand on June 1. The

desired ending inventory on June 30th is to be 20% higher than beginning

inventory. Total dollar sales for June is expected to be:

$119,700

$126,000

$128,100

$130,200

2. Allen Co.'s sales are 10% cash and 90% on credit. Credit sales are

collected as follows: 30% in month of sale, 50% the next month, 20% in

the following month. On 12/31, the accounts receivable balance is

$54,000, of which $12,000 is from November sales. Total sales for

January are budgeted to be $100,000. Cash receipts budgeted for January

total:

$70,000

$70,400

$74,000

$79,000

3. A boat costs $108,00 and, uninsured, was wrecked the first day it was

used. It either can be disposed for $11,000 cash and replaced with a

similar boat costing $110,000, or rebuilt for $98,000 and be brand new

as far as operating characteristics and looks are concerned. The net

relevant cost of replacing the boat is:

a. $ 87,000

b. $ 97,000

c. $ 99,000

d. $110,000

4. The relevant cost of rebuilding the boat described in the above

question is:

$ 97,000

$ 98,000

$ 99,000

$110,000

5. Omaha Plating Corporation is considering purchasing a machine for

$1,500,000. The machine will generate a net after-tax income of $100,000

per year for 15 years. The firm will use straight-line depreciation for

the new machine over 10 years with no residual value. What is the

payback period for the new machine?

4 years

5 years

6 years

10 years

15 years

6. Carmino Company is considering an investment in an asset that

generates net after-tax income of $6,000 at the end of each year of its

four-year life. The asset has no salvage value. The firm is in the 40%

tax bracket. The book values of the investment at the beginning of each

year are:

Year 1-$30,000; Year 2 -$15,000; Year 3 -$7,500; Year 4 -$3,750

The asset's book rate of return on average investment is:

12%

27%

36%

43%

USE THE ABOVE QUESTION TO ANSWER THE FOLLOWING ONE.

7. The amount of after-tax net cash inflow from the asset in Year 3 is:

$ 6,000

$ 7,500

$ 8,100

$13,500

a. $119,700

b. $126,000

c. $128,100

d. $130,200

2. Allen Co.'s sales are 10% cash and 90% on credit. Credit sales are collected as follows: 30% in month of sale, 50% the next month, 20% in the following month. On 12/31, the accounts receivable balance is $54,000, of which $12,000 is from November sales. Total sales for January are budgeted to be $100,000. Cash receipts budgeted for January total:

a. $70,000

b. $70,400

c. $74,000

d. $79,000

3. A boat costs $108,00 and, uninsured, was wrecked the first day it was used. It either can be disposed for $11,000 cash and replaced with a similar boat costing $110,000, or rebuilt for $98,000 and be brand new as far as operating characteristics and looks are concerned. The net relevant cost of replacing the boat is:

a. $ 87,000

b. $ 97,000

c. $ 99,000

d. $110,000

4. The relevant cost of rebuilding the boat described in the above question is:

a. $ 97,000

b. $ 98,000

c. $ 99,000

d. $110,000

5. Omaha Plating Corporation is considering purchasing a machine for $1,500,000. The machine will generate a net after-tax income of $100,000 per year for 15 years. The firm will use straight-line depreciation for the new machine over 10 years with no residual value. What is the payback period for the new machine?

a. 4 years

b. 5 years

c. 6 years

d. 10 years

e. 15 years

6. Carmino Company is considering an investment in an asset that generates net after-tax income of $6,000 at the end of each year of its four-year life. The asset has no salvage value. The firm is in the 40% tax bracket. The book values of the investment at the beginning of each year are:

Year 1-$30,000; Year 2 -$15,000; Year 3 -$7,500; Year 4 -$3,750

The asset's book rate of return on average investment is:

a. 12%

b. 27%

c. 36%

d. 43%

USE THE ABOVE QUESTION TO ANSWER THE FOLLOWING ONE.

7. The amount of after-tax net cash inflow from the asset in Year 3 is:

a. $ 6,000

b. $ 7,500

c. $ 8,100

d. $13,500

1. Juro Supply forecasts purchases of 12,200 units in June. It sells

each unit for $10.50. The firm has 1,000 units on hand on June 1. The

desired ending inventory on June 30th is to be 20% higher than beginning

inventory. Total dollar sales for June is expected to be:

$119,700

$126,000

$128,100

$130,200

2. Allen Co.'s sales are 10% cash and 90% on credit. Credit sales are

collected as follows: 30% in month of sale, 50% the next month, 20% in

the following month. On 12/31, the accounts receivable balance is

$54,000, of which $12,000 is from November sales. Total sales for

January are budgeted to be $100,000. Cash receipts budgeted for January

total:

$70,000

$70,400

$74,000

$79,000

3. A boat costs $108,00 and, uninsured, was wrecked the first day it was

used. It either can be disposed for $11,000 cash and replaced with a

similar boat costing $110,000, or rebuilt for $98,000 and be brand new

as far as operating characteristics and looks are concerned. The net

relevant cost of replacing the boat is:

a. $ 87,000

b. $ 97,000

c. $ 99,000

d. $110,000

4. The relevant cost of rebuilding the boat described in the above

question is:

$ 97,000

$ 98,000

$ 99,000

$110,000

5. Omaha Plating Corporation is considering purchasing a machine for

$1,500,000. The machine will generate a net after-tax income of $100,000

per year for 15 years. The firm will use straight-line depreciation for

the new machine over 10 years with no residual value. What is the

payback period for the new machine?

4 years

5 years

6 years

10 years

15 years

6. Carmino Company is considering an investment in an asset that

generates net after-tax income of $6,000 at the end of each year of its

four-year life. The asset has no salvage value. The firm is in the 40%

tax bracket. The book values of the investment at the beginning of each

year are:

Year 1-$30,000; Year 2 -$15,000; Year 3 -$7,500; Year 4 -$3,750

The asset's book rate of return on average investment is:

12%

27%

36%

43%

USE THE ABOVE QUESTION TO ANSWER THE FOLLOWING ONE.

7. The amount of after-tax net cash inflow from the asset in Year 3 is:

$ 6,000

$ 7,500

$ 8,100

$13,500

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