To calculate the overhead rate, we need to derive the ratio of total indirect costs to direct labor costs. Overhead rate = Indirect Cost / Direct labor cost. Total estimated overhead costs are calculated as $2,900,000 + $800,000, amounting to $3,700,000. Thus, the overhead rate is $3,700,000 divided by $80,000, yielding an overhead rate of 46.25. Consequently, the overhead rate for K company is 46.25.
Answer:
Cost of the new machine:
= Price of new machine - Trade allowance + Market value of old machine
= $16,000 - $9,000 + $6,000
= $13,000
Consequently, the journal entry would be recorded as follows:
New Machine Cost A/c Dr. $13,000
Accumulated Depreciation (Book Value) A/c Dr. $4,000
Loss from machine exchange A/c Dr. $2,000
To Old Machine (Book Value) $12,000
To Cash (16,000 - 9,000) $7,000
(To document the equipment exchange)
Answer:
IRR = 14.96%
The project should be rejected, because the calculated internal rate of return falls short of the required return (14.96% < 16%).
Explanation:
The internal rate of return (IRR) is an essential calculation in capital budgeting for assessing potential investment profitability. The IRR rule guides whether to pursue a project or investment, stipulating that if the IRR exceeds the minimum required return, the project should be accepted. Conversely, if it’s lower than the cost of capital or the requisite return, the project should be turned down.
The formula used is as follows:
$0 = (initial investment x -1) + CF1 / (1 + IRR) ^ 1 + CF2 / (1 + IRR) ^ 2 +... + CFX / (1 + IRR) ^ X
Initial Investment = Total initial investment costs year x-1
CFx = Cash Flow during period X
IRR = Internal rate of return
Due to the nature of the IRR formula, it cannot be computed analytically; it must be derived through trial and error or via specialized software for IRR calculation.
In this instance:
IRR = -27200 + 11200 / (1 + IRR) ^ 1 + 14200 / (1 + IRR) ^ 2 + 10200 / (1 + IRR) ^ 3
IRR = 14.96%
The company should not proceed with the investment, as the calculated IRR is less than what is required (14.96% < 16%).
Answer:
limits the simultaneous development of new products.
Explanation:
Product screening serves to evaluate innovative concepts, strategies, and marketing trends to assess their practicality for business investments.
A variety of criteria are utilized to determine if the idea aligns with the company's goals, as well as to verify its potential for generating returns.
[[TAG_15]]Thus, product screening effectively reduces the number of product concepts being pursued concurrently.[[TAG_16]]
Answer:
- No, he will not accumulate sufficient funds to purchase his delivery truck after 6 years.
Explanation:
To determine how much money Earl Miller—the owner of the Papa Gino's franchise—will have available in 6 years, it's necessary to assess the worth of the $20,000 he plans to invest at a 5% interest rate compounded semiannually:
With semiannual interest: 5% / 2 = 0.05/2 = 0.025
Equation:
Here, r/n was calculated previously: r/n = 0.05/2 = 0.025; and t refers to the time in years: 6.
Thus, the future value of the investment would fall short of the truck's price, meaning
he will not be able to afford the delivery truck after 6 years.
