Benny is the manager of an office-support business that supplies copying, binding, and other services for local companies. He mu

Answer:

Net Present Value = $ 34,310.45  

Explanation:

The Net Present Value (NPV) represents the difference between the present value of cash inflows and outflows. A positive NPV indicates a favorable investment decision, while a negative value suggests otherwise.

NPV of a project

NPV = Present Value of Cash inflows - Present Value of Cash outflow  

The cash inflow is characterized as an annuity.

Present Value of annuity= A × 1 - (1+r)^(-n)/r  

A refers to Annual cash flow, - 65,000, r is the discount rate at 12%, and the term is 5 years.

Calculation for Present Value of cash inflow equals 65,000 × (1 - (1.12)^(-5)/0.12) =  234,310.45.

The initial investment is 200,000.

Thus, the Net Present Value calculation is  -  234,310.45  -200,000 = 34,310.45  

Net Present Value = $ 34,310.45  

Response

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Clarification

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Answer:

the absorption costing net operating income from the previous year was $41,200

Explanation:

The Absorption Costing Net Operating Income for the last year is calculated by reconciling the Variable Costing Income to the Absorption Costing Income.

Calculation of Absorption Costing Net Operating Income

Variable Costing Income                                             $52,400

Less Decrease in Inventory ( 1,400 × $8)                   ($11,200)  

Absorption Costing Net Operating Income               $41,200

Absorption Costing Net Operating Income will be lower than Variable Costing Income.

Answer:

The total expense of the product per unit, considering a marketing expenditure of $3,000, amounts to $7,025.

Explanation:

For this special order, fixed manufacturing support costs will not be considered since they are constant regardless of order acceptance, hence irrelevant. Be sure to account for marketing costs as additional expenses.

Calculation of the product cost:

Direct materials                            $1,825

Direct labor                                 $900

Variable manufacturing support  $1,300

Marketing costs are                        $3,000

Total                                           $7,025

Conclusion:

Therefore, the total expense of the product per unit, with marketing charges of $3,000, is $7,025.