Houston Fashions is considering a new product line that would require an investment of $ 140,000 in fixtures and displays and $ 180,000 in working capital. Store managers expect the following pattern of net cash inflows from the new product line over the life of the investment. Year Amount
1 $70,000
2 78,000
3 72,000
4 56,000
5 50,000
6 48,000
7 44,000
a. Compute the payback period for the proposed new product line. Houston Fashions requires a four- year pre-tax payback period on its investments. (Round to one decimal point.) Should the company make this investment? Explain.
b. Should Houston Fashions use any other capital project evaluation method(s) before making an investment decision? Explain.

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Shelby company produces three products: product x, product y, and product z. data concerning the three products follow (per unit): product x product y product z selling price $ 85 $ 65 $ 75 variable expenses: direct materials 25.50 19.50 5.25 labor and overhead 25.50 29.25 47.25 total variable expenses 51.00 48.75 52.50 contribution margin $ 34.00 $ 16.25 $ 22.50 contribution margin ratio 40 % 25 % 30 % demand for the company’s products is very strong, with far more orders each month than the company can produce with the available raw materials. the same material is used in each product. the material costs $8 per pound, with a maximum of 4,400 pounds available each month. required: a. compute contribution margin per pound of materials used. (round your intermediate calculations and final answers to 2 decimal places.) contribution margin per pound product x $ product y $ product z $ b. which orders would you advise the company to accept first, those for product x, for product y, or for product z? which orders second? third? product x product y product z

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