1-B&B Cancer Center of Dallas incurred the following costs during the year: Research and development costs...

1-B&B Cancer Center of Dallas incurred the following costs during the year:

Research and development costs






Marketing costs


Purchase of MRI


How much of these costs should be capitalized?

  1. $574,750
  2. $264,750
  3. $312,750
  4. $150,000

2. Which of the following is correct regarding the process of benchmarking?

  1. It occurs when a company increases the price of its products and reduces operating expenses.
  2. It enhances financial analysis by comparing a company’s financial ratios with those of competing companies in the same industry.
  3. It creates substantial sales growth for most companies.
  4. It is also called trend analysis.

3. Presented below are selected ratios derived from B&B's financial statements:

Return on sales               


Total asset turnover


Financial leverage


Treasury stock return

Dividend retention rate



Using the ROE model framework, how much is B&B's ROE?

  1. 12.95%
  2. 19.87%
  3. 29.18%
  4. 39.59%

4The following information was provided by B&B Inc. for its year ending December 31:


Total Assets


Net income for the year


Shareholders' equity at year-end


How much does B&B, Inc. owe its creditors as of December 31,?

  1. $22,500,000
  2. $20,000,000
  3. $9,500,000
  4. $17,000,000

Homework Answers

Answer #1

Since, multiple questions have been posted, I have answered the first one.


Question 1:

Answer is $312,750. (which is Option C)



The amount to be capitalized is calculated as below:

Amount to be Capitalized = Patent + Trademark + Purchase of MRI = 122,500 + 27,500 + 162,750 = $312,750

Research and development costs and marketing costs are not capitalized. These costs will be expensed as they are incurred. As such the total value of capitalized costs will include the costs of patent, trademark and purchase of MRI.

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