Part 1:
Welcome to Discussions! Let's start with defining capital budgeting and decision making. What is capital budgeting? What are the differences between screening decisions and preference decisions? Do you ever have occasion to make capital budgeting decisions in your personal life?
Part 2:
For multiple choice questions, please explain why the answer chosen is correct and why the other choices are not correct. Please support your response.
Use the following to answer Questions 4
The following information has been provided by Evans Retail Stores Inc. for the first quarter of the year.
Sales $350,000
Variable selling expenses 35,000
Fixed selling expenses 25,000
Cost of goods sold (variable) 160,000
Fixed administrative expenses 55,000
Variable administrative expenses 15,000
1. The gross margin of Evans Retail Stores Inc. for the first quarter is
A) $210,000.
B) $140,000.
C) $220,000.
D) $190,000.
2. Use the following to answer Questions 2
The following selected data pertain to Beck Co.'s Beam Division for last year.
Sales $400,000
Variable expenses $100,000
Traceable fixed expenses $250,000
Average operating assets $200,000
Minimum required rate of return 20%
3. How much is the residual income?
A) $40,000
B) $50,000
C) $10,000
D) $80,000