(Appendix 13C) Houze Corporation Has Provided the Following Information Concerning

question 31

Multiple Choice

(Appendix 13C) Houze Corporation has provided the following information concerning a capital budgeting project:
The working capital would be required immediately and would be released for use elsewhere at the end of the project. The company uses straight-line depreciation on all equipment. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting.
-The total cash flow net of income taxes in year 3 is:

• A) $39,500
• B) $50,000
• C) $46,500
• D) $59,500

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Definitions:

Variances

The differences between expected and actual figures in budgeting and accounting, which can indicate over or under performance.

Materials Price Variance

The difference between the actual cost of materials used in production and the expected cost under standard costing.

Raw Materials

Basic materials that are used in the production process of manufacturing goods, which are then converted into finished products.

Standard Cost

A predetermined cost of manufacturing, labor, and material as estimated in accordance with standards set by the company.