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- In incremental analysis, ○ only variable costs are relevant. costs are not relevant if they change between alternatives. all costs are relevant if they change between alternatives. ○ only fixed costs are relevant.“Variable costs are always relevant, and fixed costs are always irrelevant.” Do you agree? Why?D1. Account How can variable expenses, indirect labor, and administrative and marketing expenses being higher than they were budgeted for be considered a weakness?
- Historical cost numbers are usually harder than market value numbers select one : True, or , False,Future costs that do not differ among the alternatives at hand are not relevant in the given decision-making situation. true or false? please answer immediatelyWhich of the following will not result in an increase in return on investment (ROI), assuming other factors remain the same?
- Specs Co is a manufacturer of spectacles and contact lenses. It is evaluating four projects for investment purposes. The projects are being evaluated based on their profitability, which is dependent on market conditions. Market conditions are forecast to be either good, average or poor and the probability of those market conditions occurring are 50%, 30% and 20% respectively. Specs Co has prepared the following profit table: Market conditions Good Average Poor Project 1 $160,000 $80,000 $10,000 Project 1 Project 2 Project 3 Project 4 Project 2 Project 4 $150,000 $130,000 $100,000 $70,000 $20,000 ($20,000) ($30,000) The profitability of the projects has been calculated after deducting directly attributable fixed costs as follows: Fixed costs $500,000 $400,000 $250,000 $200,000 Project 3 $140,000 $60,000 Specs Co has also recently employed a trainee management accountant who has been asking the finance director about how expected values can be used by an organisation.Which of the following would not be relevant in a make or buy decision? Unavoidable variable costs Incremental fixed costs Avoidable fixed costs Opportunity costsYour firm is contemplating the purchase of a new $1,683,500 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $163,800 at the end of that time. You will be able to reduce working capital by $227,500 (this is a one-time reduction). The tax rate is 23 percent and your required return on the project is 17 percent and your pretax cost savings are $636,550 per year. a. What is the NPV of this project? NPV b. What is the NPV if the pretax cost savings are $458,300 per year? NPV
