1. James Company uses process costing to track its costs in two sequential production departments: Forming and Finishing. The following information is provided regarding the Forming Department:

Forming Department
Month Ended June 30

Unit information
Beginning work in process, June 1 --- 4,000
Started into production during June --- 22,000
Completed and transferred to Finished Department during June --- 20,000
Ending work in process, June 30 (20% complete as to direct materials and 50% complete as to conversion costs) --- 6,000

Cost information:
Beginning work in process as of June 1 (consists of $1,000 of direct materials costs and $4,500 of conversion costs) --- $5,500
Direct materials used in June --- $7,268
Conversion costs incurred in June --- $32,990

Required:

(a) Calculate the equivalent units for conversion costs. (Show your work)

(b) Calculate the cost per equivalent unit for conversion costs. (Show your work) (Points : 30)

2. Harry Corp buys equipment for $194,000 that will last for 9 years. The equipment will generate cash flows of $36,000 per year and will have no salvage value at the end of its life. Ignore taxes. Use 10% required rate of return.

(a) What is the Present Value (PV) of this investment (at 10%)?

(b) What is the NET Present Value (NPV) of this investment Should you buy the equipment if you need 10%?

(c) What is the Internal Rate of Return (IRR) of this investment?
(d) What is the payback period?