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I'll tip you $15 each for a total of $30

I'll tip you $15 each for a total of $30
Problem 1  - Handy-Man Services is a repair-service company specializing in small household jobs.  Each client pays a fixed monthly service fee based on the number of rooms in the house. Records are  kept on the time and material costs used for each repair. The following profitability data apply to five  customers.   Customer Revenues Customer Costs Marveline Burnett $300 $225 J Jackson 200 305 Roger Jones 80 75 Paul Saas 75 110 Becky Stephan 350 220 Question 1: Compute the operating income for each of the five customers. (five points) Question 2: What options should Handy-Man Services consider in light of the customer-profitability  results? (five points) Question 3: What problems might Handy-Man Services encounter in accurately estimating the  operating costs of each customer? (five points) Problem 2  - Gavin and Alex, baseball consultants, are in need of a microcomputer network for their  staff. They have received three proposals, with related facts as follows:   Proposal A Proposal B Proposal C Initial investment in equipment $90,000 $90,000 $90,000 Annual cash increase in  operations:          Year 1 80,000 45,000 90,000    Year 2 10,000 45,000 0    Year 3 45,000 45,000 0 Salvage value 0 0 0 Estimated life 3 yrs 3 yrs 1 yr The company uses straight-line depreciation for all capital assets. Question 1: Compute the payback period, net present value, and accrual accounting rate of return with initial investment, for each proposal. Use a required rate of return of 14%. (10 points) Question 2: Rank each proposal 1, 2, and 3 using each method separately. Which proposal is best?  Why? (five points)
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1. (TCO 9) To guide cost allocation decisions, the fairness or equity criterion is (Points : 3) the criterion often cited in government contracts. superior when the purpose of cost allocation is for economic decisions. used more frequently than the other criteria. the primary criterion used in activity-based costing. Question 2. 2. (TCO 9) A challenge to using cost-benefit criteria for allocating costs is that (Points : 3) the costs of designing and implementing complex cost allocations are not readily apparent. the benefits of making better-informed pricing decisions are difficult to measure. cost systems are being simplified and fewer multiple cost-allocation bases are being used. the costs of collecting and processing information keep spiraling upward. Question 3. 3. (TCO 9) The MOST likely reason for NOT allocating corporate costs to divisions include that (Points : 3) divisions receive no benefits from corporate costs. these costs are not controllable by division managers. these costs are incurred to support division activities, not corporate activities. division resources are already used to attain corporate goals. Question 4. 4. (TCO 9) To allocate corporate costs to divisions, the allocation base used should (Points : 3) allocate the full costs. combine administrative and human resource management costs. have the best cause-and-effect relationship with the costs. be an output unit-level base. Question 5. 5. (TCO 9) The Hassan Corporation has an electric mixer division and an electric lamp division. Of a $20,000,000 bond issuance, the electric mixer division used $14,000,000 and the electric lamp division used $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. Which corporate costs should be allocated to divisions? (Points : 3) Variable costs Fixed c osts Neither fixed nor variable costs Both fixed and variable costs
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Question 6. 6. (TCO 10) The capital budgeting method which calculates the expected monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present using the required rate of return is the (Points : 3) accrual accounting rate-of-return method. net-present-value method. payback method. sensitivity method. Question 7. 7. (TCO 10) Assume your goal in life is to retire with $1 million. How much would you need to save at the end of each year if investment rates average 9% and you have a 15- year work life? (Points : 3) $41,286 $37,853 $25,554 $34,059 Question 8. 8. (TCO 10) The net-present-value method focuses on (Points : 3) cash inflows. accrual-accounting net income. cash outflows. both cash inflows and cash outflows. Question 9. 9. (TCO 10) A "what-if" technique that examines how a result will change if the original predicted data are not achieved or if an underlying assumption changes is called (Points : 3) adjusted rate-of-return analysis. internal rate-of-return analysis. sensitivity analysis. net-present-value analysis. Question 10. 10. (TCO 10) The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $950,000. The investment is expected to generate $350,000 in annual cash flows for a period of four years. The required rate of return is 14%. The old machine can be sold for $50,000. The machine is expected to have zero value at the end of the four-year period. What is the net present value of the investment? Would the company want to purchase the new machine? Income taxes are not considered. (Points : 3)
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Home work for week 6 soln.docx

Problem 1 - Handy-Man Services is a repair-service company specializing in small household jobs.
Each client pays a fixed monthly service fee based on the number of rooms in the house. Records are...

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