Simms Manufacturing Is Considering Two Alternative Investment Proposals with the Following

question 81

Multiple Choice

Simms Manufacturing is considering two alternative investment proposals with the following data: What is the net present value of Proposal Y, taking into consideration the initial outlay and the subsequent
Cash inflows?

• A)$0
• B)$26,800 positive
• C)$136,800 positive
• D)$133, 250 negative

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Definitions:

Overhead Cost

The ongoing, general business expenses not directly tied to producing goods or services but necessary for running the business.

Traditional Costing

A costing method that assigns factory overhead to products based on volume-related measures such as direct labor hours or machine hours.

Product B

A generic term used to differentiate one product from another in a specific context, often used for analysis, comparison, or as an example.

Direct Labor-Hours

The total hours of labor directly involved in manufacturing a product, often used as a basis for allocating overhead costs.