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# According to the depreciation rates used by the company

### Customer Question

For Neo - This is the last of them - Thank you...

8. According to the depreciation rates used by the company and described in the Production Cost Report, if a company adds 60 new workstations at a cost of \$250,000 each and also spends \$5 million for an addition to its assembly plant to accommodate the new workstations, then its annual depreciation costs will rise by

\$200,000 – A

\$700,000 – B

\$80,000 – C

\$2,000,000 – D

None of these - E

9. Assume a company’s Income Statement for a given period has the following entries:
Income Statement Data Quarter 1
(in 000s)
Sales Revenues \$50,000
Production Costs 26,500
Delivery Costs 1,600
Marketing Costs 8,500
Operating Profit 14,400
Net Interest 2,750
Income Before Taxes 11,650
Taxes 3,495
Net Income \$8,155
Given the above figures, the companyâ€™s net profit margin (defined as net income divided by sales revenues, as per the Help screen for the Comparative Financial Performance page of the GSR) is

16.3% - A

18.8% - B

17.7% - C

19.1% - D

None of these – E

10. If a company earns net income of \$35 million in Year 8, has 10 million shares of stock, pays a dividend of \$1.50 per share, and has annual interest costs of \$15 million, then

the company would have Year 9 retained earnings of \$10 million. – A

the company's retained earnings for Year 8 would be \$35 million. – B

the company's earnings per share would equal \$2.50. – C

the company's retained earnings for Year 8 would be \$5 million (net income of \$35 million less dividend payments of \$15 million less \$15 million in interest payments). - D

the company would have Year 8 retained earnings of \$20 million (net income of \$35 million less dividend payments of \$15 million). - E

11. According to the cost allocation methods used in the company's accounting system that are described in the Production Cost Report, if a company employs 100 PATs at a total labor cost of \$9,000,000 (including wages, fringes, incentives, overtime, training, and severance expenses), assembles and ships 800,000 entry-level cameras and 200,000 multi-featured cameras over the course of a year, has revenues of \$80 million from sales of entry level cameras, and revenues of \$120 million from the sale of multi-featured cameras, then the total annual labor costs allocated to the assembly and shipment of entry-level cameras and the labor costs per entry-level camera assembled and shipped, respectively, will be

\$3,600,000 and \$6.00. – A

\$7,200,000 and \$9.00.- B

\$4,500,000 and \$5.63. – C

\$5,600,000 and \$8.00. – D

\$5,600,000 and \$28.00. - E
12. Which of the following is not an action company co-managers can take to boost a subpar ROE?

Increase dividend payments so as to reduce the amount of net income retained in the business (retained earnings act to increase equity investment and thus dampen ROE) – A

Decrease the dividend payment so as to boost the amount of earnings retained in the business – B

Strive to boost the company’s net income – C

Use available cash (or perhaps borrow against the company’s line of credit) to repurchase shares of stock – D

None of these – E

13. According to explanations provided on the Help screens for the Production Cost Report, if a company pays a PAT member a base wage of \$18,500, a \$50 quarterly bonus for perfect attendance, and annual fringe benefits of \$3,300, if a PAT is paid a \$1 incentive bonus per camera assembled, and if a PAT assembles 9,600 cameras per year (or 2,400 cameras per quarter), then the annual compensation cost of a single PAT member and a fully-staffed PAT would be

\$24,400 and \$97,600 – A

\$22,000 and \$88,000 – B

\$25,300, and \$101,200 – C

\$31,200 and \$124,800 – D

None of these - E

16. If in a given year a company spends \$3 million on new product development, design, and engineering for its entry-level camera line; \$6 million on new product development, design, and engineering for its multi-featured camera line; assembles and ships 1,000,000 entry-level cameras and 200,000 multi-featured cameras, then the company’s production costs for new product development expenditures for entry-level cameras would be

capitalized and depreciated over the next five years, thus producing an average cost per entry-level camera of \$0.60 annually for each of the next five years

\$5.00 per camera – A

\$30.00 per camera – B

\$3.00 per camera – C

\$7.50 per camera - D
Submitted: 5 years ago.
Category: Multiple Problems