(TCO 9) Which of the following steps in the management decision-making process generally

involves the managerial accountant?

  Student Answer:
Determine possible courses of action
 
Make the appropriate decision based on relevant data
 
Prepare internal reports that review the impact of decisions
 
Assign responsibility
  Instructor Chapter 9, Pages 408-409
Explanation:
  Points Received: 0 of 4
  Comments:

 2. Question : (TCO 9) When is incremental analysis most useful?

  Student Answer:
After a decision has been made to determine its
effectiveness
 
In choosing between capital budgeting methods
 
In evaluating the profitability of a company
 
In developing relevant information for management
decisions
  Instructor Chapter 9, Page 409
Explanation:
  Points Received: 4 of 4
  Comments:

 3. Question : (TCO 9) Which statement is true about relevant costs in

incremental analysis?
  Student Answer:
All costs are relevant if they change between alternatives.
 
Only fixed costs are relevant.
 
Only variable costs are relevant.
 
Relevant costs should be ignored.
  Instructor Chapter 9, Page 410
Explanation:
  Points Received: 4 of 4
  Comments:

 4. Question : (TCO 9) A company is deciding whether or not to replace some

old equipment with new equipment. Which of the following is not
considered in the incremental analysis?
  Student Answer:
Annual operating cost of the new equipment
 
Annual operating cost of the old equipment
 
Net cost of the new equipment
 
Book value of the old equipment
  Instructor Chapter 9, Page 417
Explanation:
  Points Received: 4 of 4
  Comments:

 5. Question : (TCO 9) It costs Lannon Fields $14 of variable costs and $6 of
allocated fixed costs to produce an industrial trash can that sells
for $30. A buyer in Mexico offers to purchase 2,000 units at $18
each. Lannon has excess capacity and can handle the additional
production. What effect will acceptance of the offer have on net
income?
  Student Answer:
decrease $4,000
 
increase $4,000
 
increase $36,000
 
increase $8,000
  Instructor Chapter 9, Page 411
Explanation:
  Points Received: 4 of 4
  Comments:

 6. Question : (TCO 9) Hungry Bites produces corn chips. The cost of one batch
is below:
 
Direct Materials $14
Direct Labor 10
Variable Overhead 9
Fixed Overhead 10
 
An outside supplier has offered to produce the corn chips for
$20 per batch. If all fixed costs can be eliminated, how much
will Hungry Bites save if it accepts the offer?
  Student Answer:
$10 per batch
 
$13 per batch
 
$23 per batch
 
$4 per batch
  Instructor Chapter 9, Pages 412-413
Explanation:
  Points Received: 0 of 4
   Comments:

 7. Question : (TCO 9) All of the following are relevant to the sell or process-
further decision, except for __________
  Student Answer:
costs incurred beyond the split-off point.
 
revenues at the split-off point.
 
costs incurred before the split-off point.
 
revenues beyond the split-off point.
  Instructor Chapter 9, Pages 414-416
Explanation:
  Points Received: 4 of 4
  Comments:

 8. Question : (TCO 8) All of the following are involved in the capital budgeting
evaluation process, except for a company's __________
  Student Answer:
board of directors.
 
capital budgeting committee.
 
officers.
 
stockholders.
  Instructor Chapter 10, Page 444
Explanation:
  Points Received: 4 of 4
  Comments:

 9. Question : (TCO 8) The first step in the capital budgeting evaluation
process is to __________
  Student Answer:
request proposals for projects.
 
screen proposals by a capital budgeting committee.
 
determine which projects are worthy of funding.
 
approve the capital budget.
  Instructor Chapter 10, Pages 444-445
Explanation:
  Points Received: 4 of 4
  Comments:

 10. Question : (TCO 8) If a payback period for a project is greater than its
expected useful life, the __________
  Student Answer:
project will always be profitable.
 
entire initial investment will not be recovered.
 
project would only be acceptable if the company's cost of
capital was low.
 
project's return will always exceed the company's cost of
capital.
  Instructor Chapter 10, Pages 447-448
Explanation:
  Points Received: 4 of 4
  Comments:

 11. Question : (TCO 8) Intangible benefits in capital budgeting __________

  Student Answer:
should be ignored because they are difficult to determine.
 
include increased quality or employee loyalty.
 
are not considered because they are usually not relevant to
the decision.
 
have a rate of return in excess of the company’s cost of
capital.
  Instructor Chapter 10, Page 454
Explanation:
  Points Received: 4 of 4
  Comments:

 12. Question : (TCO 8) The profitability index __________.

  Student Answer:
does not take into account the discounted cash flows.
 
is calculated by dividing total cash flows by the initial
investment.
 
allows comparison of the relative desirability of projects that
require differing initial investments.
 
will never be greater than 1.
  Instructor Chapter 10, Pages 456-457
Explanation:
  Points Received: 4 of 4
  Comments:

 13. Question : (TCO 8) A post audit should be performed using __________

  Student Answer:
a different evaluation technique than that used in making
the original decision.
 
the same evaluation technique used in making the original
decision.
 
estimated amounts instead of actual figures.
 
an independent CPA.
  Instructor Chapter 10, Page 458
Explanation:
  Points Received: 4 of 4
  Comments:

 14. Question : (TCO 8) A company has a minimum required rate of return of

9% and is considering investing in a project that costs $140,000
and is expected to generate cash inflows of $56,000 at the end
of each year for 3 years. The net present value of this project is
__________
  Student Answer:
$141,736.
 
$28,000.
 
$14,174.
 
$1,752.
  Instructor Chapter 10, Page 449
Explanation:
  Points Received: 4 of 4
  Comments:

 15. Question : (TCO 8) The capital-budgeting technique that indicates the

profitability of a capital expenditure is the __________
  Student Answer:
profitability index method.
 
net present value method.
 
internal rate of return method.
 
annual rate of return method.