managerial accounting

Question 2 A Differentiate between capital and revenue expenditure, (6 B. (6 me C. he Distinguish between long-term and short-term decision-making, Builders Construction Company is considering two major investments. Respective call flows are as follows: Project 1 Project 2 S $ Cost 1 000 000 1 000 000 Cash inflows: TH clc Year 1 2 3 4 5 100 000 200 000 600 000 700 000 800 000 500 000 500 000 100 000 50 000 50 000 Fi Se The weighted average cost of capital for the projects is 14%. i. You are required to calculate the: 17 R A 1. Payback period for both projects 2. Net Present Value for both projects 3. Internal rate of return for Project 1 (2 marks) (6 marks) (6 marks) ii. Advise Builders Construction which project to choose and why, based on 1 and 2 above. (4 marks) (Total 30 marks) Question 5 Bast Company manufactures and sells handcrafted chests. Variable costs per chest are $600. While annual fixed costs amount to $180 000. Each chest is sold for $900. The firm's annual apacity is 900 chests. Prepare a break-even chart. Use this chart to identify: i. Break-even point, revenue and units ii. The profit or loss if 300 chests are produced and sold The profit or loss if revenue is $800 000 iv. The margin of safety if 800 chests are produced and sold (18 marks The company expects that fixed cost will increase by 5% and variable cost will decrease by $10 per unit 111 Using the formula method, compute what revenue would be required to earn a profit of $250 000? (7 mai (Total 25 ma