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Juro Supply forecasts purchases of 12,200 units in June. It sells each unit for $10. The firm has 1,000 units on hand on June 1.

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

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