Scott Investors, Inc., is considering the purchase of a $360,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market value of the computer will be $60,000 in five years. The computer will replace five office employees whose combined annual salaries are $105,000. The machine will also immediately lower the firm’s required net working capital by $80,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 34 percent. The appropriate discount rate is 12 percent.
Calculate the NPV of this project.
You use a normal job order cost system, in which manufacturing overhead (moh) is assigned to products using a single monthly-predetermined moh rate based on direct labor cost. For the month of March, the budgeted moh rate is 300% of direct labor cost. Budgeted direct labor cost was $30,000. Beginning inventory was:
Beginning work in process $38,000 (related solely to job #11)
Beginning finished goods $104,000 (related solely to job #10)
During the month, Job #10 was sold. Job #11 was finished, but not sold. No new jobs were put into production. Costs incurred in finishing job were: $80,000 for direct materials and $44,000 for direct labor. Actual moh incurred in finishing job #11 was $110,000. a) Calculate budgeted moh for the month. B) Calculate the cost assigned to job #11 in March and the total cost of job #11. c) Calculate the ending balance in the work in process and finished goods inventory accounts. d) Calculate the cost of goods manufactured and the cost of goods sold for March.