Accounting 2

Home > Preview

The flashcards below were created by user Kencollins08 on FreezingBlue Flashcards.

  1. In a make-or-buy decison, the relevent costs are?
    • 1. Manufacturing Costs that will be saved
    • 2. Purchase Price
    • 3. Opertunity Costs
  2. Manufacturing Costs include?
    • 1. Direct Materials
    • 2. Direct Labor
    • 3. Variable Manufacturing Overhead
    • 4. Fixed Manufacturing Overhead
  3. Annual Rate of Return
    Expected Annual Net Income / Average Investment
  4. Average Investment (Formula)
  5. The annual rate of return decision rule is?
    A project is acceptable if its rate of return is greater than managments rate of return
  6. Cash Back Period (Formula)
  7. Cash Flow (Formula)
  8. Net Present Value (Formula)
  9. Present Value of Net Cash Flows (Formula)
  10. The NPV decision rule is?
    Accept the project if NPV is zero or positive
  11. The IRR decision rule is?
    Acceot the project when IRR is equal to or greater than required rate of return
  12. Steps in determining IRR
    • 1. Compute IRR factor:
    • Capital Investment/Cash Flow=IRR Factor
    • 2. Use the factor and the present value of an annuity of 1 table to find IRR

Card Set Information

Accounting 2
2012-05-17 06:57:23

Incremental analyis & Capital budgeting
Show Answers:

What would you like to do?

Home > Flashcards > Print Preview