DeVry NY ACCT 301 Week 6 Quiz with 100% Correct Answers Guranteed (2014)KnowledgeCats
1. Question : (TCO 9) Which one of the following stages of the management decision-making process is properly sequenced?
Student Answer: Evaluate possible courses of action, make decision
Review the actual impact of the decision, determine possible courses of action
Assign responsibility for the decision, identify the problem
Make a decision, assign responsibility
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
3. Question : (TCO 9) Which of the following will never be a relevant cost?
Student Answer: Opportunity cost
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
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
6. Question : (TCO 9) Wishnell Toys can make 1,000 toy robots with the following costs:
Direct Materials $70,000
Direct Labor 26,000
Variable Overhead 15,000
Fixed Overhead 15,000
The company can purchase the 1,000 robots externally for $120,000. The avoidable fixed costs are $5,000 if the units are purchased externally. What is the cost savings if the company makes the robots?
Student Answer: $1,000
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.
8. Question : (TCO 8) Most of the capital budgeting methods use __________
Student Answer: accrual accounting numbers.
cash flow numbers.
accrual accounting revenues.
9. Question : (TCO 8) The capital budgeting decision depends in part on the __________
Student Answer: availability of funds.
relationships among proposed projects.
risk associated with a particular project.
all of the above
10. Question : (TCO 8) The cash-payback technique __________
Student Answer: should be used as a final screening tool.
can be the only basis for the capital-budgeting decision.
is relatively easy to compute and understand.
considers the expected profitability of a project.
11. Question : (TCO 8) All of the following statements about intangible benefits in capital budgeting are correct, except that they __________
Student Answer: include increased quality and employee loyalty.
are difficult to quantify.
are often ignored in capital-budgeting decisions.
cannot be incorporated into the NPV calculation.
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.
13. Question : (TCO 8) Post audits of capital projects __________
Student Answer: are usually foolproof.
are done using different evaluation techniques than were used in making the original capital budgeting decision.
provide a formal mechanism by which the company can determine whether existing projects should be supported or terminated.
all of the above
14. Question : (TCO 8) A company has a minimum required rate of return of 9% and is considering investing in a project that costs $50,000 and is expected to generate cash inflows of $20,000 at the end of each year for 3 years. The profitability index for this project is __________
Student Answer: 0.99.
15. Question : (TCO 8) Disadvantages of the annual rate of return method include all of the following, except that __________
Student Answer: it relies on accrual accounting numbers instead of actual cash flows.
it does not consider the time value of money.
no consideration is given as to when the cash inflows occur.
management is unfamiliar with the information used in the computation.
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