1.) In a capital investment analysis, when the annual net cash inflows are not equal the cash payback period cannot be determined.

Select one:

True

False

2.) The management of ABC company has established 10% as the minimum acceptable rate of return for its invested assets. The following information is available for its two divisions:

RetailEntertainmentIncome from operations$343,200$320,000Invested assets$1,320,000$1,600,000What is the rate of return for the entertainment division?

Select one:

A.20%

B.26%

C.23%

D.25%

3.) The management of ABC company has established 10% as the minimum acceptable rate of return for its invested assets. The following information is available for its two divisions:

RetailEntertainmentIncome from operations$343,200$320,000Invested assets$1,320,000$1,600,000Which division has the highest ROI and therefore most profitable?

Select one:

A.Entertainment

B.Retail

C.Both have same ROI

D.None of the above

4.) Which of the following statements is correct regarding transfer pricing?

Select one:

A.When divisions transfer products or services to each other, a transfer price must not be charged.

B.When the negotiated price approach is used, the transfer price should be more than the market price.

C.If variable cost per unit is used to determine the transfer price, fixed factory overhead cost is excluded from the transfer price.

D.None of the above

5.) A production department has $5,000 in actual direct labor costs and $4,500 in standard direct labor cots. This results in a total direct labor variance of:

Select one:

A.$500 favorable

B.$500 unfavorable

C.$5,000 favorable

D.$4,500 unfavorable

6.) In a differential analysis, differentialincome indicates a decision is expected to increase income.

Select one:

True

False

7.) In setting up a the selling price of a product, only thecosts of producing the itemsare included in the cost per unit.

Select one:

True

False

8.) A profit center isresponsible for revenues and costs affecting a business unit.

Select one:

True

False

9.) In a differential analysis, a differentialloss indicates a positive effect on net income.

Select one:

True

False

10.) The normal selling price is equal to the cost amount per unitminusmarkup.

Select one:

True

False

11.) A differential income indicates that a decision is expected to decrease income.

Select one:

True

False

12.) ACost center isresponsible for both revenues and costs affecting a business unit.

Select one:

True

False

13.) In setting a product selling price under the product cost concept, only the product costs are included in the cost per unit before adding the markup.

Select one:

True

False

14.) When analyzing costs, if actual costs are higher than standard costs, the variance is favorable.

Select one:

True

False

15.) A company should always discontinue a non profiting business segment without conducting any differential analysis.

Select one:

True

False