2.Which of the following are sunk costs for deciding whether to accept or reject a project? i.Payments for maintenance of a factory that would need to be made if the project is accepted. ii.The salaries of employees that would need to be hired to execute the new project. iii.Payments that were made to an economist to generate economic forecasts that were used when deciding whether to accept or reject the project. iv.The additional tax expenses that are expected to result from the profits of the new project. a.iii and iv, but not i or ii b.ii and iii, but not i or iv c.iii only d.iv only

2.Which of the following are sunk costs for deciding whether to accept or reject a project? i.Payments for maintenance of a factory that would need to be made if the project is accepted. ii.The salaries of employees that would need to be hired to execute the new project. iii.Payments that were made to an economist to generate economic forecasts that were used when deciding whether to accept or reject the project. iv.The additional tax expenses that are expected to result from the profits of the new project. a.iii and iv, but not i or ii b.ii and iii, but not i or iv c.iii only d.iv only

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter6: Business Expenses

Section: Chapter Questions

Problem 58P

See similar textbooks

Similar questions

Check each of the following that are sunk costs. Group of answer choices A machine then was used to research a new product that can be used in the production process if we go forward with the project, or sold if we do not The market value of the land on which we plan to build a factory The original cost of the land on which we plan to build a factory The amount we paid our research scientists to determine the feasibility of a product we are now considering. The cost to construct a factory we will build if we launch the a new product
Faced with a long-run make-or-buy decision, the manager should do all of the following except: a. consider differences in the required capital investment and the timing of cash flows b. compare the cost of making the parts with the cost of buying them c. consider the quantity and quality of the parts as well as the technical know-how required d. use a cost study with only the differential costs and with no allocation of existing fixed overhead or profit
Finance rocks had decided to reduce its fixed costs by seller some of its manufacturing facilities and assigning the production of certain parts to a group of predecessors suppliers, by doing so the company is trying to adjusts its operating leverage, financial leverage or tax burden?
(Accounting for Research and Development Costs) Czeslaw Corporation’s research and development department has an idea for a project it believes will culminate in a new product that would be very profitable for the company.Because the project will be very expensive, the department requests approval from the company’s controller, Jeff Reid.Reid recognizes that corporate profits have been down lately and is hesitant to approve a project that will incur significant expenses that cannot be capitalized due to the requirements of the authoritative literature. He knows that if they hire an outside firm that does the work and obtains a patent for the process, Czeslaw Corporation can purchase the patent from the outside firm and record the expenditure as an asset. Reid knows that the company’s own R&D department is first-rate, and he is confident they can do the work well.InstructionsAnswer the following questions.(a) Who are the stakeholders in this situation?(b) What are the ethical issues…
Explain intuitively how a manager could tweak the salvage value of machinery to benefit from an expected reduction in the corporate tax rate taking place towards the end of an investment.
Suppose that Demont has been given a summer job as an intern at Isaac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before approving such a loan. Classify each cost listed below as either product costs or period costs for the purpose of preparing the financial statements for the bank. Cost Product Cost/Period Cost1. Depreciation on chairs and tables in the factory lunchroom 2. The wages of the receptionist in the administrative offices 3. Cost of leasing the corporate jet used by the company's executives 4. The cost of renting rooms at a Florida resort for the annual sales conference 5. The cost of packaging the company's product
Suppose that Demont has been given a summer job as an intern at Isaac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before approving such a loan. Classify each cost listed below as either product costs or period costs for the purpose of preparing the financial statements for the bank. Costs Product Cost/Period Cost 1. Depreciated on salesperson's cars 2. Rent on equipment used in the factory 3. Lubricants used for machine maintenance 4. Salaries of personnel who work in the finished goods warehouse 5. Soap and paper towels used by factory workers at the end of a shift
ABC Construction Company is conducting an industry analysis of project management practices in the construction industry. As a financial analyst, you are tasked with assessing the financial implications of various project management approaches used by construction firms. a) Explain the concept of Earned Value Management (EVM) and its significance in construction project cost control. b) Compare and contrast the traditional Cost Plus Fixed Fee (CPFF) contract and the Lump Sum Fixed Price (LSFP) contract in terms of risk allocation and financial outcomes for both the construction firm and the client. c) Evaluate the impact of working capital management on construction project profitability and cash flow, considering the unique challenges and cash flow patterns in the construction industry.
____ 61. If the amount of factory overhead cost incurred exceeds the amount applied, the factory overhead account will have a: a. debit balance and be underapplied b. debit balance and be overabsorbed c. credit balance and be overapplied d. debit balance and be overapplied ____ 62. Which method of evaluating capital investment proposals uses present value concepts to compute the rate of return from the net cash flows expected from capital investment proposals? a. Internal rate of return b. Cash payback c. Net present value d. Average rate of return ____ 63. Which of the following is not a commonly used approach to setting transfer prices? a. Market price approach b. Revenue price approach c. Negotiated price approach d. Cost price approach ____ 64. The cost system best suited to industries that manufacture a large number of identical units of commodities on a continuous basis…
If you are the Financial Manager of Zenith Construction Company, which of the three alternatives has the lowest construction cost?
The high-low method and least-squares regression are used by managers to _____________________. A. decide whether to make or buy a component part B. minimize corporate tax liability C. maximize output D. estimate costs
Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?