Precision Mfg

question 27

Multiple Choice

Precision Mfg.is trying to decide which one of two machines to purchase.Machine A costs $854,000,has a life of 8 years,and requires $147,000 in pretax annual operating costs.Machine B costs $798,000,has a life of 11 years,and requires $104,000 in pretax annual operating costs.Either machine will be depreciated using the straight-line method to zero over its life.Neither machine will have any salvage value.Whichever machine is selected,it will never be replaced.The discount rate is 13 percent and the tax rate is 35 percent.Which machine should be purchased and why?

• A)Machine A because its NPV is about $114,558 higher than Machine B's NPV
• B)Machine A because its NPV is about $64,217 higher than Machine B's NPV
• C)Machine A because its EAC is about $83,404 lower than Machine B's EAC
• D)Machine B because its NPV is about $95,188 higher than Machine A's NPV
• E)Machine B because its EAC is about $83,404 lower than Machine A's EAC

Distinguish between the economic performance approach and the commercial and tax law approach to financial reporting.

Recognize the significance of global convergence towards a single set of accounting standards.

Calculate plantwide overhead rates.

Identify situations suitable for plantwide overhead rates versus departmental overhead rates or activity-based costing.

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Definitions:

Spearman's

Refers to Spearman's rank correlation coefficient, a statistical measure used to assess the strength and direction of association between two ranked variables.

Gardner's Theory

A theory proposed by Howard Gardner suggesting that intelligence is not a single general ability but a combination of multiple intelligences.

Multiple Intelligence

A theory proposed by Howard Gardner, suggesting that intelligence is not a single ability but consists of multiple intelligences, including linguistic, logical-mathematical, spatial, musical, bodily-kinesthetic, interpersonal, intrapersonal, and naturalistic.

Assimilation

The process of fully understanding or grasping information, behaviors, or cultural practices, often leading to the integration of new knowledge into one's existing understanding.