Question;1.;The practice of delegating authority and responsibility is referred to as;(Points: 2);decentralization.standard costing.management by exception.centralization of authority.;Question 2.;2.;Which of the following software applications is most suited for developing flexible budgets?;(Points: 2);DatabaseGraphicsSpreadsheetWord processing;Question 3.;3.;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 4.;4.;Summer Company's static budget is based on a planned activity;level of 25,000 units. Later, the company?s management accountant;prepared a budget based on 30,000 units. The company actually produced;and sold 29,000 units. In evaluating its performance, management should;compare the company's actual revenues and costs to which of the;following budgets?;(Points: 2);A budget based on 29,000 units.A budget based on 30,000 units.A budget based on 25,000 units.Either A or C.;Question 5.;5.;Butler Company developed a static budget at the beginning of;the company's accounting period based on an expected volume of 4,000;units:Per unitRevenue $4.00Variable costs 1.50Contribution margin $2.50Fixed costs 2.00Net income$0.50 If actual production totals 5,000 units, the flexible budget would show fixed costs of;(Points: 2);$10,000$2 per unit$8,000none of the above;Question 6.;6.;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.;Question 7.;7.;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 8.;8.;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 9.;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.;Question 10.;10.;Hansen Company reported the following information for 2010:Sales $787,000Average Operating Assets $375,000Desired ROI 9%Residual Income $ 11,250 The company's operating income for 2010 was;(Points: 2);$37,080$33,750$45,000$363,750;Question 11.;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.;Question 12.;12.;An investment that costs $30,000 will produce annual cash;flows of $10,000 for a period of 4 years. Given a desired rate of return;of 8%, the investment will generate a;(Points: 2);positive net present value of $33,121.positive net present value of $3,121.negative net present value of $33,121.negative net present value of $3,121.;Question 13.;13.;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.;Question 14.;14.;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;Question 15.;15.;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 inflows;Question 16.;16.;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 17.;17.;Cash outflows related to a capital investment may include all of the following except;(Points: 2);opportunity costs associated with selecting a specific capital project.outflows associated with the initial investment.working capital commitments.increases in operating expenses.;Question 18.;18.;Barney's Bagels invested in a new oven for $12,000. The oven;reduced the amount of time for baking which increased production and;sales for five years by the following amounts of cash inflows:Year 1Year 2Year 3Year 4Year 5$8,000$6,000$5,000$6,000$5,000Using the averaging method, the payback period for the investment in the oven would be;(Points: 2);5.0 years.2.4 years.2.0 years.1.7 years.;Question 19.;19.;Tawanna is considering starting a small business. She plans;to purchase equipment costing $145,000. Rent on the building used by the;business will be $24,000 per year while other operating costs will;total $30,000 per year. A market research specialist estimates that;Tawanna's annual sales from the business will amount to $90,000. Tawanna;plans to operate the business for 6 years. Disregarding the effects of;taxes, what will be the amount of annual net cash flow generated by the;business?;(Points: 2);8,000$54,000$90,000None of the above;Question 20.;20.;Which of the following does not represent an advantage of the;unadjusted rate of return over the payback method for evaluating;capital projects?;(Points: 2);The unadjusted rate of return method considers the investment's profitability.The unadjusted rate of return method measures the recovery of the initial investment in the project.The unadjusted rate of return is a percentage that can be compared to a stated hurdle rate.All of the above are advantage.
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