(Appendix 8C)Gouker Corporation Has Provided the Following Information Concerning a Capital

question 13

Multiple Choice

(Appendix 8C) Gouker Corporation has provided the following information concerning a capital budgeting 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 2 is:

• A)$90, 000
• B)$76, 000
• C)$108, 500
• D)$140, 000

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Definitions:

Actual Overhead Costs

The real costs that a company incurs for its indirect materials, indirect labor, and other overhead expenses.

Direct Labour Cost

The wages and benefits paid to workers who are directly involved in the manufacturing process.

Manufacturing Overhead Applied

The allocation of overhead costs to the goods produced, based on a predetermined overhead rate.

Job-order Costing

A cost accounting system that accumulates manufacturing costs separately for each job.