Problem 1. Grogan Manufacturing is working on two jobs. Cost is accumulated under a job order cost system, and overhead is applied on the basis of direct labor hours. The company estimated that overhead would be $32,000 and 10,000 direct labor hours would be worked. Both projects were started and completed in the current accounting period. The following transactions were completed during the period:
(a) Used $5,000 of direct material on Project I and $3,400 of direct material on Project II.
(b) Labor costs for the two jobs amounted to the following: Project I, $12,000 (2,000 hours); Project II, $22,000 (6,000 hours).
(c) Project II was sold during the period for $60,000.
How do I calculate the ending balance in work in process?
Problem 2. Crown Company is considering purchase of equipment that costs $60,000. If the useful life is expected to be 5 years and Crown's required rate of return is 10%, what is the minimum annual cash inflow that the equipment must offer for the investment to be acceptable? Please show calculations.
a. $15,027
b. $15,828
c. $16,644
d. $18,928
Problem 3. Graves Company is considering purchase of equipment that costs $60,000 and is expected to offer annual cash inflows of $19,000. Graves' minimum required rate of return is 10%. How many years must the cash flows last, for the investment to be acceptable? (Round to nearest whole year.) Please show calculations.
a. 1
b. 2
c. 3
d. 4