question your company is interested in having a


Question

Your company is interested in having a new facility constructed. The contractor expects that it will take approximately 3 years to complete the building. The contractor has offered you three payment plans for the building. They are as follows:

Time

Plan 1

Plan 2

Plan 3

Today

$300,000

$1,035,000

$950,000

1 year from now

$1,300,000

$1,035,000

$0

2 years from now

$1,300,000

$1,035,000

$1,600,000

3 years from now

$1,300,000

$1,035,000

$1,600,000

The CFO of your company has asked you to provide recommendation concerning which payment plan to accept. What is your recommendation? Assume your weighted-average cost of capital is 10%.

Question

List and describe four "red flags" that may indicate you should consider revising your overhead allocation system.

Question

a) Describe the differences between unit-related, batch-related, and product-sustaining activities. Give one example of each type of activity.

b) Describe the difference between transaction drivers and duration drivers. When would one type be preferred over the other?

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Cost Accounting: question your company is interested in having a
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