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saint mBa560 quiz 8




Question;Question 1.1.The practice of delegating authority and responsibility is referred to as: (Points: 2) decentralization.standard by exception.centralization of authority.Question 2.2.A budget prepared at a single volume of activity is referred to as a: (Points: 2) strategic budget.static budget.standard budget.flexible budget.Question 3.3.The following static budget is provided:Units20,000 unitsSales$ 200,000Less variable costs:Manufacturing costs$ 70,000Selling and administrative costs$ 40,000Contribution Margin$ 90,000Less fixed costs:Manufacturing costs$ 22,000Selling and administrative costs$ 17,000Net Income$ 51,000What will be the budgeted net income if 18,000 units are produced and sold? (Points: 2) $31,000$180,000$400,000$42,000Question 4.4.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.Question 5.5.Static and flexible budgets are similar in that: (Points: 2) they both are prepared for multiple activity levels.they both concentrate solely on costs.they both are based on the same per unit variable amounts and the same total fixed costs.none of the above.Question 6.6.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.Question 7.7.Which of the following is not typically found in a decentralized organization? (Points: 2) Asset centerCost centerInvestment centerProfit centerQuestion 8.8.Select the incorrect statement regarding flexible budgets. (Points: 2) Standard prices and costs are used in preparing a flexible budget.A flexible budget is also known as a master budget.A flexible budget shows different levels of activity.A flexible budget represents an extension of the master budget.Question 9.9.Bilbo Company evaluates its managers on the basis of return on investment (ROI). Division Three has an ROI of 15% while the company as a whole has an ROI of only 10%. Which of the following performance measures will motivate the managers of Division Three to accept a project earning a 12% return? (Points: 2) Return on investment (ROI)Residual income (RI)Both ROI and RI will motivate the manager to accept the projectNeither ROI nor RI will motivate the manager to accept the projectQuestion 10.10.Which of the following should notbe included in the investment base used to compute residual income? (Points: 2) Accounts receivableAn idle warehouseCashInventoryQuestion 11.11.Which of the following would increase residual income? (Points: 2) Decrease in operating incomeDecrease in operating assetsIncrease in the required ROIDecrease in marginQuestion 12.12.Britannia Company has two investment opportunities. A cash flow schedule for the investments is provided below:YearInvestment AInvestment B0($5,000)($6,000)12,0003,00022,0002,00032,0002,00042,0001,000Which of the following techniques would be most appropriate for choosing between Investment A and Investment B? (Points: 2) Payback techniquePresent value indexNet present value techniqueNone of the aboveQuestion 13.13.Mountain Brook Company is considering two investment opportunities whose cash flows are provided below:YearInvestment AInvestment B0($15,000)($9,000)15,0005,00025,0004,00035,0003,00044,0001,000The company's hurdle rate is 12%. What is the present value index of Investment A? (Points: 2) of the aboveQuestion 14.14.An investment that costs $25,000 will produce annual cash flows of $5,000 for a period of 6 years. Further, the investment has an expected salvage value of $3,000. Given a desired rate of return of 12%, the investment will generate a: (Points: 2) negative net present value of $25,000.negative net present value of $2,923.positive net present value of $20,557.negative net present value of $1,520.Question 15.15.Select the incorrect statement concerning the internal rate of return (IRR) method of evaluating capital projects. (Points: 2) The higher the IRR the better.A project whose IRR is less than the cost of capital should be rejected.If a project has a positive net present value then its IRR will exceed the hurdle rate.The internal rate of return is that rate that makes the present value of the initial outlay equal to zero.Question 16.16.Which of the following computer applications would be most useful for capital investment analysis? (Points: 2) Word processingSpreadsheetWeb browserPresentation softwareQuestion 17.17.Which of the following is not a factor in explaining why the present value of a future dollar is less than one dollar? (Points: 2) InflationInterestHistorical costRisk of failure to receive expected cash inflowsQuestion 18.18.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.Question 19.19.Which of the following would be considered a cash inflow in determining the value of a capital investment? (Points: 2) Incremental revenues from increased productivityCost savings from a reduction in labor hoursA reduction in working capital commitmentsAll of the above are considered cash inflowsQuestion 20.20.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) $22,727.28$27,000.00$27,522.94$27,300.00


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