Quip Corporation Wants to Purchase a New Machine for $300,000

question 46

Multiple Choice

Quip Corporation wants to purchase a new machine for $300,000.Management predicts that the machine can produce sales of $200,000 each year for the next 5 years.Expenses are expected to include direct materials,direct labor,and factory overhead (excluding depreciation) totaling $80,000 per year.The firm uses the straight-line depreciation and expects the machine to have a residual value of $50,000.Quip's tax rate is 40%.Management requires a minimum of 10% return on all investments.What is the approximate internal rate of return (IRR) of the proposed investment? (Note: To answer this question,students must have access to Table 2 from Appendix C,Chapter 12. )

• A)Less than 12%.
• B)Somewhere between 12% and 14%.
• C)Somewhere between 14% and 15%.
• D)Somewhere between 15% and 20%.
• E)Over 20%.

Appreciate the impact of demographic and social changes, such as movements between urban and rural areas or changes in the labor force composition, on GDP.

Understand the recording of raw materials, work in process, finished goods, and manufacturing overhead in a job order cost system.

Calculate predetermined overhead rates and apply overhead to manufacturing costs.

Prepare journal entries for transactions involving raw materials, labor, overhead, and the sales process.

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Definitions:

Customers List

A compilation of information regarding a company's customers, including contact details, order history, and preferences, used for sales and customer service.

Add Job

The process of creating or setting up a new job or project within a software application or system.

Cash Sale

A transaction in which goods or services are paid for in full using cash at the time of the sale.

Customer Payment

A transaction where a customer completes payment for goods or services received from a business.