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    Final Exam Mnagerial Acctg203030

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    Anna Fermina Mendoza
    The document contains two problems related to managerial accounting. Problem 1 involves capital budgeting and calculating cash payback period, net present value, and annual rate of return for three investment projects. Problem 2 involves calculating variable and absorption manufacturing costs per unit and preparing income statements using variable and absorption costing methods for a company that produces and sells fishing lures.

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    Final Exam Mnagerial Acctg203030

    Uploaded by

    Anna Fermina Mendoza
    17 views1 page
    The document contains two problems related to managerial accounting. Problem 1 involves capital budgeting and calculating cash payback period, net present value, and annual rate of return for three investment projects. Problem 2 involves calculating variable and absorption manufacturing costs per unit and preparing income statements using variable and absorption costing methods for a company that produces and sells fishing lures.

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    Final exam Mnagerial Acctg203030

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    The document contains two problems related to managerial accounting. Problem 1 involves capital budgeting and calculating cash payback period, net present value, and annual rate of return for three investment projects. Problem 2 involves calculating variable and absorption manufacturing costs per unit and preparing income statements using variable and absorption costing methods for a company that produces and sells fishing lures.

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    17 views1 page

    Final Exam Mnagerial Acctg203030

    Uploaded by

    Anna Fermina Mendoza
    The document contains two problems related to managerial accounting. Problem 1 involves capital budgeting and calculating cash payback period, net present value, and annual rate of return for three investment projects. Problem 2 involves calculating variable and absorption manufacturing costs per unit and preparing income statements using variable and absorption costing methods for a company that produces and sells fishing lures.

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    Managerial Accounting 203030

    Final Examination NOTE: Final Exam submission will be at 12nn tomorrow


    April 19, 2021 April 20, 2021.

    Problem No. 1
    Topic: Capital Budgeting

    The three Stooges partnership is considering three long-term capital investment proposals. Each
    investment has a useful life of 5 years. Relevant data on each project are as follows:

    Project Moe Project Larry Project Curly


    Capital investment $150,000 $160,000 $200,000
    Annual net income
    Year 1 13,000 18,000 27,000
    2 13,000 17,000 22,000
    3 13,000 16,000 21,000
    4 13,000 12,000 13,000
    5 13,000 9,000 12,000
    Total $ 65,000 $72,000 $95,000
    vvvvvvvv vvvvvvv vvvvvvv

    Depreciation is computed by the straight-line method with no salvage value. The company’s cost of
    capital is 15%. (Assume that cash flows occur evenly throughout the year.)

    Required:
    a) Compute the cash payback period for each project. (Round to two decimals.)
    b) Compute the net present value for each project. (Round to nearest dollar.)
    c) Compute the annual rate of return for each project. (Round to two decimals.) (Use average
    annual net income in your computation.)
    d) Rank the proposal on each of the foregoing bases. Which proposal do you recommend?

    Problem No. 2
    Topic: Variable Costing: A Decision-Making Perspective

    Bob’s Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2005,
    the company incurred the following costs.

    Variable cost per unit


    Direct materials $7.50
    Direct labor $2.45
    Variable manufacturing overhead $5.75
    Variable selling and administrative expenses $3.90

    Fixed costs per year


    Fixed manufacturing overhead $234,650
    Fixed selling and administrative expenses $240,100

    Bob’s Company sells the fishing lures for $25. During 2005, the company sold 80,000 lures and produced
    95,000 lures.

    Required:
    a) Assuming the company uses variable costing, calculate Bob’s manufacturing cost per unit for
    2005.
    b) Prepare a variable costing income statement for 2005.
    c) Assuming the company uses absorption costing, calculate Bob’s manufacturing cost per unit for
    2005.
    d) Prepare an absorption costing income statement for 2005.

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