Required Payback Period: 2

question 11

Multiple Choice

$$\begin{array}{l}\text { You are analyzing a project and have prepared the following data: }\\\begin{array} { | l | l | } \hline \text { Year } & \text { Cash Flow } \\\hline 0 & - £ 169,000 \\\hline 1 & £ 46,200 \\\hline 2 & £ 87,300 \\\hline 3 & £ 41,000 \\\hline 4 & £ 39,000 \\\hline\end{array}\end{array}$$ Required payback period: 2.5 years Required AAR: 7.25%
Required return: 8.50%
Based on the profitability index of _____ for this project, you should _____ the project.

• A).97; accept
• B)1.05; accept
• C)1.18; accept
• D).97; reject
• E)1.05; reject

Analyze the impact of actual activity levels against budgeted levels on manufacturing overhead

Understand the concept and calculation of standard machine-hours and standard labor-hours

Distinguish between the fixed and variable components of the predetermined overhead rate

Evaluate overhead application and its impact on product cost

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