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Required:
Part A: What is the net present value of this investment opportunity?
Part B: Based on your answer to (a) above, should Simpson go ahead
with the new conditioning shampoo? (Points : 30)
PART B:
Simpson should not go ahead and purchase the shampoo machine since
the NPV is negative.
7. (TCO A) The following data (in thousands of dollars) have been taken
from the accounting records of Karmana Corporation for the just-
completed year.
8. (TCO F) Matuseski Corporation is preparing its cash budget for
October. The budgeted beginning cash balance is $54,000. Budgeted
cash receipts total $127,000 and budgeted cash disbursements total
$99,000. The desired ending cash balance is $100,000. The company
can borrow up to $150,000 at any time from a local bank, with interest
not due until the following month.
Required: Prepare the company's cash budget for October in good form.
Make sure to indicate what borrowing, if any, would be needed to attain
the desired ending cash balance. (Points : 25)
9. (TCO F) Bella Lugosi Holdings, Inc. (BLH), has collected the
following operating information for its current month's activity. Using
this information, prepare a flexible budget analysis to determine how
well BLH performed in terms of cost control.
Actual Costs Incurred Static Budge t
Activity level (in units) 5,250 5,178
Variable costs:
Indirect materials $24,182 $23,476
Utilities $22,356 $22,674
Fixed costs:
Administration $63,450 $65,500
Rent $65,317 $63,904
(Points : 25)
10. (TCO H) Lindon Company uses 10,000 units of Part Y each year as
a component in the assembly of one of its products. The company is