Professional Documents
Culture Documents
Multiple Choice: Select the letter of your choice. Write your answers in a
white sheet of paper (crosswise). Use the black pen and bolden your
answers. Send your answers to my gmail account
estelagpascual55@gmail.com
2. The use of relevant cost data to identify the alternative that provides the greatest benefit to the
organization describes
a. target cost analysis.
b. functional cost analysis.
c. activity cost analysis.
d. tactical cost analysis.
6. Ecru Company manufactures 10,000 components per year. The manufacturing cost of the
components was determined as follows: Direct materials $ 70,000 Direct labor 115,000 Variable
manufacturing overhead 40,000 Fixed manufacturing overhead 60,000 Total $285,000 An outside
supplier has offered to sell the component for $20. What is the effect on income if Ecru Company
purchases the component from the outside supplier?
a. A $25,000 increase
b. A $25,000 decrease
c. A $85,000 decrease
d. A $85,000 increase
7. Yankton Industries manufactures 20,000 components per year. The manufacturing cost of the
components was determined as follows:
Direct materials $140,000
Direct labor 230,000
Inspecting products 60,000
Providing power 30,000
Providing supervision 40,000
Setting up equipment 60,000
Moving materials 20,000
Total $580,000
If the component is not produced by Yankton, inspection of products and provision of power costs will
only be 10 percent of the production costs; moving materials costs and setting up equipment costs will
only be 50 percent of the production costs; and supervision costs will amount to only 40 percent of the
production amount. An outside supplier has offered to sell the component for $23.50. What is the effect
on income if Yankton Industries purchases the component from the outside supplier?
a. $25,000 increase
b. $45,000 increase
c. $80,000 decrease
d. $80,000 increase
10. Which of the following is a perspective of strategic-based responsibility accounting but is NOT a
perspective of activity-based responsibility accounting?
a. financial perspective
b. process perspective
c. customer perspective
d. all of the above
20. A project requires an investment of $40,000 in equipment. Annual cash flows of $8,000 are expected
to occur for the next eight years. No salvage value is expected. The company uses the straight-line
method of depreciation with no midyear convention. Ignore income taxes. The accounting rate of return
on the original investment for the project is
a. 6.25%. b. 7.50%. c. 16.00% . d. 20.00%
21. Which of the following methods uses income instead of cash flows?
a. payback b. accounting rate of return
c. internal rate of return d. net present value
22. A firm is evaluating a project that has a net present value of $0 when a discount rate of 8 percent is
used. A discount rate of 6 percent will result in a
a. negative net present value.
b. positive net present value.
c. net present value of $0.
d. the question cannot be answered based upon the information provided.
23. Which of the following is true about a positive net present value?
a. It measures the increase in the value of a firm resulting from an investment.
b. It measures the rate at which the discount rate has decreased.
c. It indicates that an investment is not profitable and hence should be rejected.
d. It indicates that the cost of capital is less than the hurdle rate
24. Which of the following statements is true about internal rate of return?
a. It is the difference between the present value of a cash outflow and the depreciation associated with
an asset.
b. It is the minimal acceptable interest rate on an investment.
c. It is the difference between the present value of the cash inflows and outflows associated with a
project.
d. It is the interest rate that sets a project's net present value at zero
25. Linda's Graphic Designs is considering the purchase of a used color Laser Printer costing $38,400. The
Printer would generate an annual cash flow of $16,000 for three years. At the end of three years, the
Printer would have no salvage value. The company's cost of capital is 10 percent. The company uses
straight-line depreciation with no mid-year convention. What is the internal rate of return to the nearest
percent for the Printer, assuming no taxes are paid?
a. 8% b. 10% c. 12% d. 42%
=======adopted========
merry Christmas and happy new year to all
May GOD’S BLESSINGS POUR ON YOU AND YOUR FAMILY!!!!