The Following Information Is Available for a Potential Investment for Panda

question 48

Multiple Choice

The following information is available for a potential investment for Panda Company: $$\begin{array} { l r } \text { Initial investment } & \$ 95,000 \\\text { Net annual cash inflow } & 20,000 \\\text { Net present value } & 36,224 \\\text { Salvage value } & 10,000 \\\text { Useful life } & 10 \text { yrs. }\end{array}$$ The potential investment's profitability index is

• A)4.75.
• B)3.22.
• C)2.62.
• D)1.38.

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Definitions:

Manufacturing Overhead Account

This refers to the ledger account that records all indirect factory-related costs incurred during a production period that are not directly tied to a specific product.

Overapplied

A condition where the allocated indirect costs exceed the actual indirect costs incurred.

Underapplied

A situation where the allocated or applied costs are less than the actual costs incurred, leading to a cost discrepancy.

Costing Data

Information required for determining the cost of products or services, including materials, labor, overhead, and other related expenses.