1. Jose paid $500,000 for a manufacturing plant which can be used for water bottle production (estimated annual profits of $120,000) after a thorough cleaning ($10,000 cost, which is not included in annual profit projections). Jose can also upgrade the plant for $70,000 (not included in annual profit projections) to produce juice bottles which will increase profits to $140,000 annually, Earlier today, Jose hired two executive managers, who will earn $60,000 each per year (this expense is already included in profit projections). Assuming Jose chooses to pay the non-refundable cost for cleaning to start water bottle production, his first-year opportunity cost will be:

Select one: a. $110,000 b. $0 c. $70,000 d. None of these

2. Kim is considering three investment options and wants to use the profitability index method to decide. Here are the details:

Option A: Required investment: $1,000 Present value of cash flows: $3,400

Option B: Required investment: $10,000 Present value of cash flows: $33,800

Option C: Required investment: $5,000 Present value of cash flows: $18,200

Which option should Kim select?

Select one: a. Option A, because it has the lowest required investment b. None of these c. Option B, because it has the highest net present value d. Option C, because it has the lowest/cheapest profitability index Clear my choice

3. Fred believes that if everything goes perfectly, he can produce desktop computers for $300 each. However, there could be minor delays and other expected drawbacks which could add 25% to the production costs. This month, Fred produced 25 computers at a total cost of $7,800. Which is true?

Select one: a. Based on practical standards, there is a total favourable variance of $1,575 b. Based on ideal standards, there is a total favourable variance of $1,575 c. None of these are true. d. Based on practical standards, there is a total unfavourable variance of $1,575

4. On a comprehensive performance report, a flexible budget sales number which is higher than an actual sales number suggests:

Select one: a. unfavourable sales volume variance b. favourable sales volume variance c. favourable flexible budget variance d. unfavourable flexible budget variance

5. On a comprehensive performance report, a static budget operating income number which is higher than an actual operating income number suggests:

Select one: a. favourable flexible budget variance b. favourable static budget variance c. favourable sales volume variance d. None of these

6. Larry's annual profits total $100,000. Departments 1, 2, and 3 generate profits of $35,000 each. Assuming the company's fixed costs of $60,000 are allocated evenly between its 4 departments, should Larry close Department 4?

Select one: a. Yes, if under one-third of Department 4's fixed costs are avoidable. b. Yes c. No d. Yes, if over one-third of Department 4's fixed costs are avoidable.

7. Fred believes that if everything goes perfectly, he can produce desktop computers for $300 each. However, there could be minor delays and other expected drawbacks which could add 25% to the production costs. This month, Fred produced 20 computers at a total cost of $7,800. Which is true?

Select one: a. Based on practical standards, there is an unfavourable variance of $90 per computer b. None of these are true. c. Based on ideal standards, there is an unfavourable variance of $15 per computer d. Based on practical standards, there is a favourable variance of $15 per compute

8. Jonah is an assembly line worker at AMZ corp. His salary is categorized as a:

Select one: a. Product and direct labour cost b. Period and administrative cost c. Product and indirect labour cost d. None of these

9. What is ultimately the major determining factor in the decision to close a struggling business department?

Select one: a. The department's total variable and fixed costs b. The department's total fixed costs c. The department's sales revenue d. The department's avoidable fixed costs

10. Reena is looking at her overhead variances for last year.

Variable overhead spending variance: 500 favourable Variable overhead efficiency variance: 600 favourable Fixed overhead budget variance: 200 unfavourable Fixed overhead volume variance: 400 unfavourable

Which is true?

Select one: a. Overhead is over-applied and actual expenses are more than budgeted expenses b. Overhead is over-applied and actual expenses are less than budgeted expenses c. Overhead is under-applied and actual expenses are more than budgeted expenses d. None of these are true.

11. Uma is looking at the following direct labour data:

Actual hours: 1,000 Standard hours: 980 Actual rate: $17 Standard rate: $18

Which is true?

Select one: a. The labour efficiency variance is $360 favourable b. The labour efficiency variance is $340 unfavourable c. The labour rate variance is $1,000 unfavourable d. None of these Clear my choice

12. Veera tries to ensure she has 30% of next month's sales needs in hand at the end of the prior month. It is June 1st and Veera has 32 purses on hand. She expects to sell 90 purses in June and 110 in July. Assuming she places only one order per month, how many purses should Veera order for next week?

Select one: a. 33 b. None of these c. 122 d. 123

13. Fiora analyzes the numerical data she is given without bias and produces a fair report on the business situation. This most closely relates to the concept of:

Select one: a. Objectivity b. Confidentiality c. Competence d. Corporate governance

14. UCW corp. purchased 500 kgs of iron for $1,000 total last quarter, but used only 400 kgs to produce 700 degree frames. Assuming the standards are that 0.50 kgs should be used to produce one frame and one kg should cost $1.80, which is true?

Select one: a. Both the price variance and quantity variance are favourable b. None of these are true c. The price variance is unfavourable but the quantity variance is favourable d. Both the price variance and quantity variance are unfavourable

15. Dean is wondering if a discount received for an early payment of an input (such as metal to produce spoons) has an impact on the quantity standard for direct materials. What should you tell him?

Select one: a. Yes, because a discount essentially means a larger quantity of material is purchased. b. No, but the discount can lower the price standard for direct materials. c. None of these are correct. d. No, but it can impact the actual quantity used.

16. Management accounting is concerned with:

Select one: a. external reporting of past events b. internal reporting of past events c. internal reporting of future analysis d. external reporting of future analysis

17. Jan is considering investing $1,000 in a 3% interest rate environment. Which is the better option for her (all cash inflows include her principal investments being returned to her)?

Select one: a. Invest in a project that returns $1,020 in one year. b. Invest in a project that returns $1,035 in two years. c. Invest in a project that returns $1,050 in three years. d. Don't invest. Clear my choice

18. Hal has a policy of having exactly $20,000 of cash on hand at the start of each year. It's October 31 and he currently has $4,000 on hand. He expects cash inflows to outpace cash outflows by $1,000 per month for the remainder of the year. Assuming he wants to deal with any potential cash shortages immediately, what should Hal do?

Select one: a. Nothing b. None of these c. Repay $2,000 d. Borrow $14,000

19. Levi makes wooden train sets and sells them for $500 apiece. Last month, Levi's variable costs totaled $1,000. Assuming Levi sold 10 sets last month and earned $2,500, what is her total cost equation for a train set?

Select one: a. Y = $1,000 + $400(X) b. Y = $2,500 + $100(X) c. Y = $1,500 + $100(X) d. None of these

20. Uma is looking at the following direct labour data:

Actual hours: 980 Standard hours: 1,000 Actual rate: $18 Standard rate: $17

Which is true?

Select one: a. None of these b. The labour rate variance is $1,000 unfavourable c. The labour efficiency variance is $340 unfavourable d. The labour efficiency variance is $360 favourable

21. On a comprehensive performance report, a static budget sales number which is higher than a flexible budget sales number suggests:

Select one: a. favourable flexible budget variance b. unfavourable sales volume variance c. unfavourable flexible budget variance d. favourable sales volume variance

22. Glenn has noticed that his service cost per customer increases when he halves working hours. Hence, his servicing process incurs: Select one: a. fixed costs b. only overhead costs c. It is impossible to answer this question without more information d. variable costs

23. Hal has a policy of having exactly $20,000 of cash on hand at the start of each year. It's October 31 and he currently has $4,000 on hand. He expects cash inflows to outpace cash outflows by $6,000 for the remainder of the year. Assuming he wants to deal with any potential cash shortages immediately, what should Hal do?

Select one: a. Borrow $2,000 b. Nothing c. Borrow $22,000 d. None of these

24. Erik, a Chief Financial Officer, is in the process of evaluating if manufacturing plans made and implemented earlier in the year are working well. Erik is in which phase?

Select one: a. Directing and Motivating b. Planning c. Controlling d. None of these

25. Ana notes that a responsibility center's funding/investment decisions are made at the corporation's headquarters. The center's manager reports its revenues and expenses to the headquarters on a monthly basis. This center is best described as:

Select one: a. an investment center b. More information is needed. c. a cost center d. a profit center

26. Dana wants to boost her Return on Investment ratio. Which option would help her achieve this goal? Select one: a. Decrease variable costs and operating assets b. Decrease sales and variable expenses c. Increase sales and fixed expenses d. None of these.