This Website Has Been Moved to a New Link


The kind of responsibility center that would be evaluated by comparing the amount of income

Price: $9.99

1. The kind of responsibility center that would be evaluated by comparing the amount of income earned to the amount of assets invested is a(n): (Points : 2)
cost center.
asset center.
investment center.
profit center.

2. O'Donnell Company makes computer chips. Sam is manager of the company's maintenance department. Because his maintenance technicians are so well trained in maintaining expensive and sensitive circuit board stamping equipment, Sam has been authorized to contract to perform maintenance for outside customers. In this company, the maintenance department is likely organized as a(n): (Points : 2)
cost center.
revenue center.
profit center.
investment center.

3. When would a variance be labeled as unfavorable? (Points : 2)
When standard costs are more than actual costs
When expected sales are more than actual sales
When actual sales are equal to expected sales
None of the above

4. When would a variance be labeled as favorable? (Points : 2)
When standard costs are equal to actual costs
When standard costs are less than actual costs
When expected sales are greater than actual sales
When actual costs are less than standard costs

5. The following static budget is provided:

20,000 units
$ 200,000
Less variable costs:
Manufacturing costs
$ 70,000
Selling and administrative costs
$ 40,000
Contribution Margin
$ 90,000
Less fixed costs:
Manufacturing costs
$ 22,000
Selling and administrative costs
$ 17,000
Net Income
$ 51,000

What will be the budgeted net income if 18,000 units are produced and sold? (Points : 2)

6. Contribution margin would be one of the most important measurements used in evaluating the performance of a(n): (Points : 2)
cost center.
profit center.
investment center.
organizational center.

7. Assuming actual volume is 11,000 units and planned volume is 10,000 units, the sales volume variance: (Points : 2)
is 1,000 units favorable.
is 1,000 units unfavorable.
cannot be determined without additional information.
none of the above.

8. A difference between the static budget based on planned volume and a flexible budget prepared at actual volume is called a: (Points : 2)
flexible budget variance.
volume variance.
production activity variance.
static budget variance.

9. When using residual income (RI) as a project-screening tool, management should accept a project if: (Points : 2)
RI is negative.
RI is positive.
RI equals return on investment.
none of the above.

10. Picard Company reported the following information for 2010:

Average Operating Assets
Desired ROI
Operating Income
$ 50,000

The company's residual income for 2010 was: (Points : 2)

11. Which of the following statements about ROI is false? (Points : 2)
ROI is used to measure the performance of investment centers.
ROI = margin divided by investment turnover.
Trying to maximize ROI can result in a conflict between the interest of a particular manager and the interest of the business as a whole.
The book value of operating assets is frequently used as the investment base for calculating return on investment.

12. Melanie Company is considering a capital project that costs $16,000. The project will deliver the following cash flows:

Year 1
Year 2
Year 3
Year 4
Year 5

Using the incremental approach, the payback period for the investment is: (Points : 2)
5 years.
2.4 years.
2 years.
1.66 years.

13. Which of the following statements concerning payback analysis is true? (Points : 2)
An investment with a longer payback is preferable to an investment with a shorter payback.
The payback method ignores the time value of money concept.
The payback method and the unadjusted rate of return are different approaches that will consistently lead to the same conclusion.
All of the above are true.

14. All of the following are capital investment decisions except: (Points : 2)
purchasing $40,000 of machinery.
buying a $4,000,000 manufacturing plant.
acquiring $400,000 of common stock.
paying $500,000 to renovate a retail store.

15. What amount of cash must be invested today in order to have $30,000 at the end of one year assuming the rate of return is 9%? (Points : 2)

16. A cash flow that only occurs once is referred to as: (Points : 2)
an annuity.
a lump sum.
a principal sum.
none of the above.

17. A customary assumption in capital budgeting analysis is that: (Points : 2)
the desired rate of return includes the effects of compounding.
the cash inflows generated by the investment are reinvested at the desired rate of return.
annual cash flows occur at the end of each period.
all of the above.

18. The rate of return that equates the present value of cash inflows and outflows from a capital investment is the: (Points : 2)
minimum rate of return.
internal rate of return.
desired rate of return.
none of the above.

19. An even stream of payments over equal time periods where the cash flows are assumed to occur at the end of each period is referred to as a(n): (Points : 2)
annuity due.
ordinary annuity.

20. What amount of cash would result at the end of one year, if $17,000 is invested today and the rate of return is 10%? (Points : 2)
None of the above

No comments:

Post a Comment