Intelligence:

McDaniel, Inc uses the direct method to prepare its statement of cash flows

Refer to the following financial statement information for the year ended December 31, 2017: McDaniel, Inc Comparative Balance Sheet December 31, 2017 and 2016 2017 2016 Increase (Decrease) Cash $35,100 $15,100 $20,000 Accounts Receivable 26,800 33,800 (7,000 ) Merchandise Inventory 56,100 29,100 27,000 PP&E, net 126,000 92,000 34,000 Total Assets $244,000 $170,000 $74,000 Accounts Payable 9,700 13,700 $(4,000 ) Accrued Liabilities 6,900 2,900 4,000 Long-term Notes Payable 69,400 78,400 $(9,000 ) Total Liabilities $86,000 $95,000 $(9,000 ) Common Stock $55,000 $3,000 $52,000 Retained Earnings 115,000 78,000 37,000 Treasury Stock (12,000 ) (6,000 ) (6,000 ) Total Stockholders' Equity $158,000 $75,000 $83,000 Total Liabilities and Stockholders' Equity $244,000 $170,000 $74,000 McDaniel, Inc Income Statement December 31, 2017 and 2016 2017 2016 Sales Revenue $289,700 Interest Revenue 2,600 Gain on Sale of Plant Assets 6,000 Total Revenues and Gains $298,300 Cost of Goods Sold 146,800 Salaries and Wages Expense 47,500 Depreciation Expense-Plant Assets 16,000 Other Operating Expense 24,700 Interest Expense 3,500 Income Tax Expense 7,800 Total Expenses 246,300 Net Income $52,000 Use the direct method to compute the payments made to employees. (Accrued Liabilities relate to other operating expense.) A) $72,200 B) $43,500 C) $24,700 D) $47,500

Shasta Company is trying to decide whether to continue to manufacture a particular component or to buy the component from an outside supplier. Which of the following is irrelevant with respect to this decision?

A) the quality of the component purchased from the outside supplier B) the outside supplier's ability to deliver the component on a timely basis C) the alternative uses of the facilities currently being used to manufacture the component D) the unavoidable fixed manufacturing costs associated with the manufacture of the component