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    Description of Managerial Accounting Questions

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    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?

    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.
    Answer
    a. $15,027
    b. $15,828
    c. $16,644
    d. $18,928

    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.
    Answer
    a. 1
    b. 2
    c. 3
    d. 4

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    Solution Summary

    A description of managerial account questions are given. Project II being sold during the period are given.

    $2.19

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