Jason Corporation Has Invested in a Machine That Cost $80,000

question 60

Multiple Choice

Jason Corporation has invested in a machine that cost $80,000, that has a useful life of eight years, and that has no salvage value at the end of its useful life. The machine is being depreciated by the straight-line method, based on its useful life. It will have a payback period of five years. Given these data, the simple rate of return on the machine is closest to:

• A)6.8%
• B)7.5%
• C)9%
• D)12%

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Definitions:

Production Budget

An estimate of the total cost of production, including materials, labor, and overhead costs, for a specific period.

Ending Inventory

is the value of goods available for sale at the end of an accounting period, calculated by adding new purchases to the starting inventory, then subtracting the cost of goods sold.

Budgeted Sales

Projected or planned sales for a future period, often used for planning and financial forecasting.

Master Budget

A comprehensive financial plan for an organization, including all individual budgets related to sales, production, overheads, etc., for a specific period.