Question 1

An energy efficient air compressor will cost $30,000 installed and will require $1,000 worth of maintenance each year for its life of 10 years. Energy costs will be $6,000 per year. A standard air compressor will cost $25,000 and will require $500 worth of maintenance each year. Its energy costs will be $10,000 per year. At an interest rate of 12%, which one is preferable?

Question 2

Caprice Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:

Sales are budgeted at $390,000 for November, $400,000 for December, and $380,000 for January.

Collections are expected to be 55% in the month of sale, 43% in the month following the sale, and 2% uncollectible.

The cost of goods sold is 80% of sales.

The company desires an ending merchandise inventory equal to 35% of the cost of goods sold in the following month. Payment for merchandise is made in the month following the purchase.

The November beginning balance in the accounts receivable account is $74,000.

The November beginning balance in the accounts payable account is $261,000.

Required:

a.Schedule of Expected Cash Collections for November and December.

b.Merchandise Purchases Budget for November and December.

Question 3

South River Chemicals Pty Ltd manufactures a product called Zybek. Direct materials are added at the beginning of the process and

conversion activity occurs uniformly throughout the process. The following data pertains to the month of May.

Direct materials

Work in process, May 1-60%15,000

Units started during May60,000

Units completed and transferred out68,000

Work in process, May 31-20%7 000

Conversion costs

Using the weighted-average method of process costing, calculate the equivalent units of direct materials and conversion costs for the month of May.