1. Decentralized firms can delegate authority and yet retain control and monitor managers' performances by structuring the organization into so-called "responsibility centers." Which one of the following business segments/responsibility centers is most like an independent business?

Select one:

a. Revenue center

b. Profit center

c. Cost center

d. Profit and loss center

e. Investment center

2 Ally Mfg. uses a standard cost system and its July production of 1,800 units involved actual direct labor costs of $242,000 for 5,500 hours worked (AQ). The budget for July called for production of 2,000 units with 6,000 direct labor hours at $40.00 per hour (SP). Ally's direct labor efficiency variance for July is:

Select one:

a. $2,000 unfavorable

b. $4,000 unfavorable

c. $20,000 favorable

d. $22,000 unfavorable

e. $26,000 unfavorable

3. The King Mattress Company had the following operating results for 2015-2016. In addition, the company paid dividends in both 2015 and 2016 of $60,000 per year and made capital expenditures in both years of $30,000 per year. The company's stock price in 2015 was $8 and $7 in 2016. The industry average earnings multiple for the mattress industry was 9 in 2016 and the free cash flow and sales multiples were 18 and 1.5, respectively. The company is publicly owned and has 1,200,000 shares of outstanding stock at the end of 2016.

Balance Sheet, Dec 31,
	2016	2015
Cash	$340,000	$100,000
Accounts Receivable	$350,000	$400,000
Inventory	$250,000	$300,000
Total Current Assets	$940,000	$800,000
Long-lived Assets	1,080,000	1,100,000
Total Assets	$2,020,000	$1,900,000
Current Liabilities	$200,000	$300,000
Long-term Debt	600,000	500,000
Shareholder Equity	1,220,000	1,100,000
Total Debt and Equity	$2,020,000	$1,900,000
Income Statement, for year ended Dec 31,
	2016	2015
Sales	$4,750,000	$4,500,000
Cost of Sales	4,100,000	4,000,000
Gross Margin	650,000	500,000
Operating Expenses	350,000	400,000
Operating Income	300,000	100,000
Taxes	120,000	40,000
Net Income	$180,000	$60,000
Cash Flow From Operations	2016	2015
Net Income	$180,000	$60,000
Plus Depreciation Expense	50,000	50,000
+ Decrease (-inc) in AccRec. and Inv.	100,000	-
+ Increase (-dec) in Cur. Liabl.	(100,000)	-
Cash Flow from Operations	$230,000	$110,000

Return on equity for 2016 is (rounded):

Select one:

a. 11.6%

b. 14.6%

c. 15.5%

d. 18.9%

4. The internal rate of return (IRR) is the

Select one:

a. Rate of interest that equates the present value of after-tax cash outflows and the present value of after-tax cash inflows associated with a given project

b. Minimum acceptable rate of return for a proposed investment.

c. Risk-adjusted rate of return.

d. Required rate of return.

e. Weighted-average rate of return generated by internally generated funds.

5, The King Mattress Company had the following operating results for 2015-2016. In addition, the company paid dividends in both 2015 and 2016 of $60,000 per year and made capital expenditures in both years of $30,000 per year. The company's stock price in 2015 was $8 and $7 in 2016. The industry average earnings multiple for the mattress industry was 9 in 2016 and the free cash flow and sales multiples were 18 and 1.5, respectively. The company is publicly owned and has 1,200,000 shares of outstanding stock at the end of 2016.

Balance Sheet, Dec 31,
	2016	2015
Cash	$340,000	$100,000
Accounts Receivable	$350,000	$400,000
Inventory	$250,000	$300,000
Total Current Assets	$940,000	$800,000
Long-lived Assets	1,080,000	1,100,000
Total Assets	$2,020,000	$1,900,000
Current Liabilities	$200,000	$300,000
Long-term Debt	600,000	500,000
Shareholder Equity	1,220,000	1,100,000
Total Debt and Equity	$2,020,000	$1,900,000
Income Statement, for year ended Dec 31,
	2016	2015
Sales	$4,750,000	$4,500,000
Cost of Sales	4,100,000	4,000,000
Gross Margin	650,000	500,000
Operating Expenses	350,000	400,000
Operating Income	300,000	100,000
Taxes	120,000	40,000
Net Income	$180,000	$60,000
Cash Flow From Operations	2016	2015
Net Income	$180,000	$60,000
Plus Depreciation Expense	50,000	50,000
+ Decrease (-inc) in AccRec. and Inv.	100,000	-
+ Increase (-dec) in Cur. Liabl.	(100,000)	-
Cash Flow from Operations	$230,000	$110,000

The accounts receivable turnover ratio for 2016 is (rounded):

Select one:

a. 11.2

b. 12.7

c. 13.7

d. 14.9