1. If the net present value of a proposed capital investment is greater than zero,

a. the internal rate of return is greater than the minimum desired rate of return (also called the hurdle rate or cost of capital).

b. the internal rate of return is equal to the minimum desired rate of return.

c. the internal rate of return is less than the minimum desired rate of return.

d. there is no relationship between net present value and internal rate of return.

2. Pinacle Corp. budgeted $300,000 of overhead cost for 2008. Actual overhead costs for the year were $290,000. Pinacle's plant-wide allocation base, machine hours, was budgeted at 50,000 hours. Actual machine hours were 40,000. Budgeted units to be produced are 100,000 units. Pinacle's plant-wide factory overhead rate for 2008 is:

a.$5.00 per machine hour b.$1.25 per unit c.$6.00 per machine hour d.$6.25 per machine hour

3. Rabbitt Co. operates in a just-in-time (JIT) manufacturing environment. For June production, Rabbitt purchased 5,000 units of raw materials at $5.00 per unit on account. The journal entry required to record this transaction is: a. Raw and In Process Inventory 25,000 Accounts Payable 25,000 b. Cost of Goods Manufactured 25,000 Accounts Payable 25,000 c. Finished Goods 25,000 Accounts Payable 25,000 d. Raw Materials Inventory 25,000 Accounts Payable 25,000

4. Which of the following are present value methods of analyzing capital investment proposals?

a.Internal rate of return and average rate of return b.Net present value and payback c.Net present value and internal rate of return d.Average rate of return and net present value