Harry Hardwick Is Starting a Job-Order Machine Shop and Is

question 25

Multiple Choice

Harry Hardwick is starting a job-order machine shop and is buying used equipment such as lathes,planing mills,and drill presses.What is the term for this type of equipment?

• A) special-purpose
• B) automated
• C) general-purpose
• D) product-layout

Understand and calculate the payback period for investment projects.

Identify and evaluate the profitability index and internal rate of return as investment appraisal methods.

Analyze the implications of ignoring salvage value in capital budgeting decisions.

Determine the applicability of net present value method under varying scenarios.

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Definitions:

Average Operating Assets

The average value of the assets used in the day-to-day operations of a business over a specific period.

Turnover

The rate at which inventory is sold and replaced over a period or the rate at which employees leave and are replaced in a business.

Net Operating Income

Represents the profit a company makes from its operational activities after subtracting operating expenses from its operating revenues.

Profit Centres

Divisions or segments of a business with direct responsibility for generating profits.