PLEASE SHOW COMPLETE SOLUTION FOR NUMBER 3. THANK YOU

COST MANAGEMENT ACCOUNTING

1.) Material C is needed in a work. The work requires 1500 items. 800 items arealready in store because of overbuying. Material C has a book valueof P 4, a realizable value of P 2.55 and a replacements cost of P 6 per item.If Material C has no other use , the relevant cost is P6,421? *

A.) True

B.) False

C.) cannot be determined with the data given

2.) A work required Material A. The work requires 2000 items. There are no inventory already in place nor is there a book value or realizable value for the material. Material A has however a replacement cost of P 8.00 per item. This material is used regularly by the company. The relevant cost in this case is P8 per item or P16,000 .

A.) True

B.) cannot be determined with the data given

C.) False

3.) A company expects sales for a new project to be P20,000 in the first year, growing at 4% per annum. The project is expected to last for 3 years. Working capital equal to 15% of annual sales is required and needs to be in place at the start of each year. Calculate the working capital cash flows for incorporation into the NPV calculation.

4.) Assuming a ten thousand , eight-year life ,no salvage value investment with a 30% tax rate, the af ter-tax payback period would be 5 years.

A.) True

B.) False

5.)

A.) 13%.

B.) 15%.

C.) 17%.

D.) 11%

6.) By how much will operating income increase or decrease if the order is accepted?

A.) 34,000

B.) 20,000

C.) 43,000

D.) 30,000

E.) other answer

7.) In what year will discounted payback occur?

A.) 1

B.) 2

C.) 3

D.) 4

8.) Considering the data below, The relevant cost to consider if the order is rejected is 16.3.

A.) Incomplete data

B.) true

C.) False

9) Which of the following describes the statements correctly?

A.) True,True,True,False

B.) False,True,False,True

C.) All statements are true.

D.) True,False,True,True

E.) False,True,True,True

10.) Is the summary below all correct?

A.) True

B.) False

0 ABC Corp. is looking at two mutually exclusive projects with the following after-tax cash flows: TIME 1 2 3 4 5 6 Project 1 -10,000 2,000 2,000 2,000 4,000 4,000 4,000 Project 2 -12,000 2,000 2,000 2,000 5,000 5,0005,000 Given that ABC's cost of capital is 7.5%, the IRR of the project that should select is closest to: A new customer approached ABC Co. with an offer to purchase 20,000 items at a price of P9 each. Existing sales would not be affected if this offer is taken. ABC normally produces 100,000 items per year but only plans to produce and sell 75,000 in the coming year. The normal sales price is P14 per item. Item cost information for the normal level of activity is as follows: Direct materials P3.00 Direct labor 2.80 Variable overhead 1.50 Fixed overhead 2.00 Fixed overhead will not be affected by the special order. A company has the following cash flow for a project: Year Cash flow 0 (100,000) 1 40.000 2 20.000 3 30.000 45,000 5 40.000 The company uses a discount rate of 10%. what year will discounted payback occur? A new customer approached ABC Co. with an offer to purchase 20,000 items at a price of P9 each. Existing sales would not be affected if this offer is taken. ABC normally produces 100,000 items per year but only plans to produce and sell 75,000 in the coming year. The normal sales price is P14 per item. Item cost information for the normal level of activity is as follows: Direct materials P3.00 Direct labor 2.80 Variable overhead 1.50 Fixed overhead 2.00 Fixed overhead will not be affected by the special order. Statement 1: To be relevant to a particular decision, a revenue or cost must meet two criteria: (a) it must be an expected future revenue or cost, and/or (b) it must differ among alternative courses of action. Statement 2: In choosing among multiple products when resource capacity is constrained, managers should emphasize the product that yields the highest contribution margin total of the constraining factor. Statement 3: Fixed costs are irrelevant - unless it is directly attributable fixed costs. Statement 4: Absorbed overhead and general overheads are irrelevant. Is the summary below all correct? NPV > O IRR > hurdle rate NPV = 0 IRR = hurdle rate NPV