This paperwork of ACCT 434 Week 6 Customer Profitability Capital Budgeting shows the solutions to the following problems:
1. To guide cost allocation decisions,the benefits-received criterion2. A challenge to using cost-benefit criteria for allocating costs is that3. The MOST likely reason for NOT allocating corporate costs to divisions include that4. Identifying homogeneous cost pools5. The Hassan Corporation has an electric mixer division and an electric lamp division. Of a $20,000,000 bond issuance, the electric mixer division used $14,000,000 and the electric lamp division used $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. What amount of interest costs should be allocated to the electric lamp division?6. All of the following are methods that aid management in analyzing the expected results of capital budgeting decisions EXCEPT the7. Assume your goal in life is to retire with $1.5 million. Howmuch would you need to save at the end of each year if interest ratesaverage 5% and you have a 25-year work life?8. The definition of an annuity is9. A “what-if” technique that examines how a result will change ifthe original predicted data are not achieved or if an underlying assumptionchanges is called10. Shirt Company wants to purchase a new cutting machine for itssewing plant. The investment is expected to generate annual cash inflowsof $300,000. The required rate of return is 12% and the current machine isexpected to last for four years. What is the maximum dollar amount ShirtCompany would be willing to spend for the machine, assuming its life is alsofour years? Income taxes are not considered.
