DeVry NY ACCT 301 Week 6 Quiz with 100% Correct Answers Guranteed (2014)

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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

     Sunk cost

    Variable cost

    Fixed 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

    increase $4,000

    increase $36,000

     increase $8,000

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

    $5,000

    $10,000

     $4,000

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.

    net income.

    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.

    1.00.

     1.01.

    1.20.


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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    DeVry NY ACCT 301 Week 6 Quiz with 100% Correct Answers Guranteed (2014)
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