BUSN278 - Midterm Exam

 1.

Question :

(TCO 1) The type of budget that is updated on a regular basis is known as a ________________

Student Answer:

 continuous budget.

revised budget.

updated budget.

flexible budget.

 2.

Question :

(TCO 2) The quantitative forecasting method that uses actual sales from recent time periods to predict future sales assuming that the closest time period is a more accurate predictor of future sales is:

Moving average model

Weighted moving average model

Closest moving average model

Exponential smoothing model

 3.

Question :

(TCO 3) The regression statistic that measures how many standard errors the coefficient is from zero is the ________________

Student Answer:

[removed] correlation coefficient.

coefficient of determination.

standard error of the estimate.

 t-statistic.

 4.

Question :

(TCO 4) Capital expenditures are incurred for all of the following reasons except:

Student Answer:

[removed] As preventive maintenance

To counteract competition

Decreased production

Improvement in product quality

 5.

Question :

(TCO 5) Which of the following is not true when ranking proposals using zero-base budgeting?

Student Answer:

Due to changing circumstances, a low-priority item may later become a high-priority item.

Decision packages are ranked in order of increasing benefit.

 Divisional and departmental managers submit initial recommendations, with top management making the final ranking.

 Non-funded packages should also be ranked.

 6.

Question :

(TCO 6) Which of the following ignores the time value of money?

Student Answer:

Internal rate of return

Profitability index

Net present value

 Payback period

 7.

Question :

(TCO 1) There are several approaches that may be used to develop the budget. Managers typically prefer an approach known as participative budgeting.  Discuss this form of budgeting and identify its advantages and disadvantages.

 8.

Question :

(TCO 2) There are a variety of forecasting techniques that a company may use. Identify and discuss the three main quantitative approaches used for time series forecasting models.

 11.

Question :

(TCO 6) Jackson Company is considering two capital investment proposals. Estimates regarding each project are provided below:

 

 

The company requires a 9% rate of return on all new investments.

 

Part (a) Calculate the payback period for each project.

Part (b) Calculate the net present value for each project.

Part (c) Which project should Jackson Company accept and why?

Question 12 (TCO 6) Top Growth Farms, a farming cooperative, is considering purchasing a tractor for $468,000. The machine has a 10-year life and an estimated salvage value of $32,000. Top Growth uses straight-line depreciation. Top Growth estimates that the annual cash flow will be $78,000. The required rate of return is 9%.

 

Part (a) Calculate the payback period.

Part (b) Calculate the net present value.

Part (c) Calculate the accounting rate of return.