Question

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Question 9 2 pts Which of the following is an example of a period cost? O Advertising expense Indirect materials Depreciation on factory equipment O Property taxes for the factory

Answer 1

9 Answer is Advertising expense Advertising is part of selling cost and hence it is period cost Period costs are the costs which are charged to the period in which is incurred Remaining three costs are part of manufacturing cost and hence part of product cost 10 Answer is first option Managerial accounting is used for internal reporting purpose and not used for external reporting External reporting is Financial reported and it is stakeholders for creditors and investors Managerial accounting is used for regular decision making 12 Answer is $230,000 Annual cash inflow PV factor for 7% for 5 years Present value of cash inflows Less: Initial investment Net present value $300,000 4.1000 $1,230,000 $1,000,000 $230,000 13 Answer is 7.9% Calculation of average net income Year 1-5 Net cash flows $140,000 Less: Depreciation $81,000 Net Income $59,000 Period 5 Total net income $295,000 Average net income Year 5-10 $100,000 $81,000 ($900,000-$90,000)/10 years $19,000 5 $95,000 $390,000 $39,000 Total net income/10 years Accounting Rate of return Average Net Income $39,000 Average investment $495,000 7.9% Average investment = (Initial investment +Salvage value)/2