1. Please list the three capital budgeting methods that analyze the cash flows (rather than incremental net operating income). Answer: Q2. Please state drawbacks of the payback method. Answer: (1) (2) Q3. What are the two important assumptions of net present value method? Answer: (1) (2) Q4. Please state the formula to compute profitability index. Answer: Q5. What are the definitions of differential cost and differential revenue? Are the differential cost and differential revenues relevant in decision-making? Answer: Q6. Why do we isolate relevant costs from irrelevant costs? Answer: First, Second, Q7. Mountain Goat Cycles has just received a request from the Seattle Police Department to produce 100 specially modified mountain bikes at a price of $558 each. The modifications requested by the Seattle Police Department consist of welded brackets to hold radios, nightsticks, and other gear. These modifications would require $34 in incremental variable costs. In addition, the company would have to pay a graphics design studio $2,400 to design and cut stencils that would be used for spray painting the Seattle Police Department's logo and other identifying marks on the bikes. Mountain Goat Cycles can easily modify its City Cruiser model to fit the specifications of the Seattle Police. The normal selling price of the City Cruiser bike is $698, and its unit product cost is $564 as shown below: Direct materials ................................$372 Direct labor .........................................$90 Manufacturing overhead ................$102 Unit product cost .............................$564 The variable portion of the above manufacturing overhead is $12 per unit. The order would have no effect on the company's total fixed manufacturing overhead costs. How much is the financial advantage (disadvantage) of accepting the Seattle Police Department's order? Answer: Financial advantage (disadvantage) of $_________. Q8. Please fill in the blank. A constraint is anything that prevents you from getting more of what you want. The constraint, or bottleneck, in the system is determined by the step that limits ______________ because it has the ________ capacity. Q9. Please fill in the blank. Customers and competitors play important roles in determining the price _______ for a company's products and services. A company's price floor is determined by its incremental costs. The price ______ represents the lowest price that a company can charge and still make incremental profit on the sales transaction. Q10. How the selling price is determined by cost-plus pricing? Fill in the blank. Selling price = (1 + ________)*Cost Q11. What are the four categories of balanced scorecards? Answer: 1. ______________ 2. _______________ 3.________________ 4._______________ Q12. Please state the formula of MCE (manufacturing cycle efficiency) and OEE (overall equipment effectiveness). Answer: MCE = OEE = Q13. Please briefly state the definitions of ROI (return on investment), RI (residual income), EVA (economic value added), ROS (return on sales). Answer: ROI = RI = EVA = ROS = Q14. How is management control distinguished from objective setting and strategy formulation? Please fill in the blank. Management functions are separated along a process involving objective setting, strategy formulation, and management control. Management control is the back end of the management process. Management control has the same meaning as the terms _________ and strategy __________. Q15. What are the three causes of management control problems? 1. _________________ 2. _________________ 3. _________________ Q16. What are good controls and perfect controls? Answer: Q17. Please briefly state four ways to avoid controls problems. 1. _____________ 2. _____________ 3. _____________ 4. _____________ Q18. What are the common types of management controls? 1. _____________ 2. _____________ 3. Personnel/Cultural controls