Camptown Togs, Inc., a children’s clothing manufacturer, has always found payroll processing to be costly because it must be done by a clerk so that the number of piece-goods coupons received by each employee can be collected and the types of tasks performed by each employee can be calculated. Not long ago, an industrial engineer designed a system that partially automates the process by means of a scanner that reads the piece-goods coupons. Management is enthusiastic about this system because it utilizes some personal computer systems that were purchased recently. It is expected that this new automated system will save $45,000 per year in labor. The new system will cost about $30,000 to build and test prior to operation. It is expected that operating costs, including income taxes, will be about $5,000 per year. The system will have a five-year useful life. The expected net salvage value of the system is estimated to be $3,000.
(a) Identify the cash inflows over the life of the project.
(b) Identify the cash outflows over the life of the project.
(c) Determine the net cash flows over the life of the project.

Answer:

a. Time period   Cash Inflow

    Year 1              $45,000

    Year 2             $45,000

    Year 3             $45,000

    Year 4             $45,000

    Year 5             $48,000 ($45,000+$3,000)

b. Time period   Cash Outflow

    Year 0             $30,000

    Year 1              $5,000

    Year 2             $5,000

    Year 3             $5,000

    Year 4             $5,000

    Year 5             $5,000

c. Time period   Cash Inflow  Cash Outflow  Net Cash Flow

    Year 0              $0                  $30,000          -$30,000

    Year 1              $45,000         $5,000              $40,000

    Year 2             $45,000         $5,000              $40,000              

    Year 3             $45,000         $5,000              $40,000

    Year 4             $45,000         $5,000              $40,000

    Year 4             $48,000         $5,000              $43,000

Which phrase best completes the list?
Characteristics of the U.S. Economy
Free market with some government regulation
Competition between businesses encouraged
A. No centralized banking system
B. Banks owned mostly by the government
o o
Ο Ο
C. Tax rates set by private companies
D. Individuals and businesses given economic freedom

The service-profit chain is designed to help managers better understand the key linkages in a service delivery system that drive customer loyalty, revenue growth, and higher profits.

a. True
b. False

Wildhorse Locomotive Corporation purchased for $604,000 a 40% interest in Lopez Railways, Inc. This investment enables Wildhorse Locomotive to exert significant influence over Lopez Railways. During the year, Lopez Railways earned net income of $159,000 and paid dividends of $27,000. Prepare ZaneLocomotive’s journal entries related to this investment.

Problem 4-8 Sales and Growth [LO2] The most recent financial statements for Alexander Co. are shown here: Income Statement Balance Sheet Sales $ 42,950 Current assets $ 17,580 Long-term debt $ 37,070 Costs 35,550 Fixed assets 68,350 Equity 48,860 Taxable income $ 7,400 Total $ 85,930 Total $ 85,930 Taxes (21%) 1,554 Net income $ 5,846 Assets and costs are proportional to sales. The company maintains a constant 35 percent dividend payout ratio and a constant debt-equity ratio. What is the maximum dollar increase in sales that can be sustained assuming no new equity is issued

An economic profit includes implicit costs and accounting profit does not. A distinction between them is important because an accounting profit is a relative amount of money. Some amount of accounting profit may or may not be a sufficient amount of profit to keep an entrepreneur in:________

Tammy, a resident of Virginia, is considering purchasing a $100,000 North Carolina bond that yields 4.6% before tax. She is in the 35% Federal marginal tax bracket and the 5% state marginal tax bracket. She is aware that State of Virginia bonds of comparable risk are yielding 4.5%. However, the Virginia bonds are exempt from Virginia tax, but the North Carolina bond interest is taxable in Virginia. Tammy can deduct any state taxes paid on her Federal income tax return. In your analysis, assume that the bond amount is $100,000.

The Oxford Company uses a job order cost system and applies factory overhead to jobs on the basis of direct labor cost. During the month of July, the following activities took place in the work-in-process account:

Beginning $15,000
Direct materials 10,000
Direct labor 30,000
Overhead applied 15,000
  
At the end of July, only one job (Job #15), was still in process. This job has been charged with $2,000 of direct materials cost.
Required:
Determine the amount of direct labor cost incurred and overhead applied in the ending inventory of work-in-process on July 31.