You Have Just Landed an Internship in the CFO's Office

question 35

Multiple Choice

You have just landed an internship in the CFO's office of Hawkesworth Inc. Your first task is to estimate the Year 1 cash flow for a project with the following data. What is the Year 1 cash flow? $\begin{array}{l}\begin{array}{l}\text { Sales revenues } \\\text { Depreciation } \\\text { Other operating costs } \\\text { Tax rate }\end{array}\begin{array}{r}\$ 13,000 \\\$ 4,000 \\\$ 6,000 \\350 \%\end{array}\end{array}$

• A) $5,950
• B) $6,099
• C) $6,251
• D) $6,407
• E) $6,568

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Definitions:

Production Cost

The direct and indirect expenses incurred to manufacture goods or provide services.

Equivalent Units

A concept in cost accounting used to denote the amount of work done on incomplete units, expressed in terms of fully completed units.

Physical Units

A measure of production output or inventory in terms of the actual number of units, as opposed to the cost or value of the units.

Percentage of Completion

A method of accounting for long-term contracts in which income is recognized as a proportion of work completed at certain stages.