Fletcher Corp

question 51

Multiple Choice

Fletcher Corp.is considering the purchase of a new piece of equipment.The equipment will have an initial cost of $400,000,a 5-year life,and a salvage value of $75,000.If the accounting rate of return for the project is 10%,what is the annual increase in net cash flow? Ignore income taxes.

• A)$25,000
• B)$40,000
• C)$65,000
• D)$105,000

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Definitions:

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing process or providing a service.

Single Plantwide Factory Overhead Rate

A method of allocating factory overhead to products based on a single, consistent rate applicable throughout the entire manufacturing plant.

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing process, often used as a basis for allocating factory overhead.

Desk Lamp Production

The process involving the assembly, testing, and packaging of desk lamps for consumer use.