Accounting 2101 Final

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1.) A company is considering the following alternatives: Alternative 1 Alternative 2
Revenues $120,000 $120,000
Variable Costs $60,000 $60,000
Fixed Costs $35,000 $35,000
Which of the following are relevant in choosing between the alternatives?

2.) Adler Company manufactures a product with the following costs: Unit Variable Cost $50 Unit Fixed Cost $24 Total Cost Per unit $74
The company normally sells 10,000 units at a price of $88 each. Adler has a one-time opportunity to sell an additional 3,000 units at $70 each in a foreign market, which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
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exclusive projects which have the following financial characteristics: Project A Project B
Net present value $50,000 $75,000
Initial investment $200,000 $400,000
Project life 4 years 4 years
Which project will be accepted?

18.) Hingis Hardware is evaluating a new retail location and its accountants have prepared some information for your review. Their analysis has established that the new location will costs $1,500,000 and generate net present value of $100,000 using a discount rate of 10%. What is the profitability index for this project?

19.) Ruano, Inc. is analyzing the acquisition of new equipment, which will cost $50,000. Accountants have determined that this equipment will have a five-year useful life, and in each year generate net income of $12,800 and operating cash flow of $14,200. The company requires a 10% return on invested capital.
What is the approximate IRR of this equipment acquisition?

20.) In most cases, prices are set by the

21.) Which of the following is not considered a limitation of cost-plus pricing?

22.) Downing company produces a high-resolution computer monitor. The following information is available for this product:
Fixed cost per unit $50
Variable cost per unit $150
Total cost per unit $200
Downing expects to sell 10,000 units per year. The company has decided to price its monitors to earn a 14% return on its investment of

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