1.Capital Budgeting- Southern Company is consider expanding its manufacturing facility to meet increasing customer demand. The investment is $100,000 with a useful life of ten years with no salvage value at the end of the ten years. The Company expects the investment will result in $20,000 of positive cash flow per year over the life of the investment. Southern requires at 10% rate of return to make the investment.

The Net Present Value of this investment is:

a.$0

b.$100,000

c.$14,091

d.$22,900

2.Job Order Costing System - Which of the following items is not a factor when determining cost of product sold.

a.Labor costs

b.Period costs

c.Materials cost

d.Overheads

3.Cost Volume Profit Analysis - The Western Company sold its product for $800 each and had a variable cost of $250 each and the fixed cost per month was $180,000. The company plans on selling 600 units this month. The margin of safety in units is:

a.200

b.273

c.327

d.None of the answers provided

4.Cost-Plus Pricing - Philadelphia Swim Club is planning for the coming year. Investors would like to earn a10% return on the company's $37,000,000 of assets. The company primarily incurs fixed costs to maintain the swimming pool. Fixed costs are projected to be$12,600,000 for the year. About 540,000 members are expected to swim each year. Variable costs are about $13 per swimmer. The Philadelphia Swim Club has a favorable reputation in the area and has control over the membership pricing. Using a costplus approach, what price should Philadelphia Swim Club charge for a membership

a.$36.33

b.$43.18

c.$6.83

d.$29.48

5.Discontinuing a Product Line- Westfall Watches has two product lines: Luxury and Sporty watches. Income statement data for the most recent year follows:

TotalLuxurySporty

Sales/Revenue$490,000$360,000$130,000

Variable Expenses354,000235,000119,000

Contribution Margin136,000125,00011,000

Fixed Expenses76,00038,00038,000

Operating Income/ (Loss)$60,000$87,000$(27,000)

Assuming fixed costs do not change, how would discontinuing the Sporty line effect operating income?

a.Increase in total operating income of $49,000

b.Increase in total operating income of $130,000

c.Decrease in total operating income of $136,000

d.Decrease in total operating income of $ 11,000

9. Special Order Decisions - Which of the following should be considered for special order decisions?

a.Whether the special order will affect regular sales in the long run

b.Whether excess capacity exists

c.Whether the special price will be high enough to cover incremental costs of filling the order

d.All of the listed choices should be considered in special order decisions.

10 Which of the following is TRUE?

a.Total fixed costs decrease when volume increases.

b.Total fixed costs decrease when volume decreases

c.Fixed unit cost per unit increases when volume increases

d.Fixed cost per unit decreases when volume increases.