1

1. Which of the following is used to compute the present value of future cash flows when evaluating investments involving cash flows over time where time elapses between cash payment and receipt?

QUESTION 23

1. Which of the following statements istrueregarding the master budget?

   		The master budget is a blueprint of the planned operations of a firm for a period.
   		The master budget begins with the production budget.
   		The master budget does not require a sales forecast.
   		all of the above.

2 points

QUESTION 24

1. Which of these is a common type of fraud on financial statements?

   		improper revenue recognition.
   		improper expense recognition.
   		understating inventory.
   		miscounting cash

2 points

QUESTION 25

1. The step method allocates costs of service departments to

   		other service departments.
   		producing departments.
   		joint products.
   		other service departmentsandproducing departments.

1. prime rate plus 1 point.

   United States Federal Reserve Interest Rate.

   firm's cost of capital.

   short-term United States Treasury Bill rate.

2 points

QUESTION 2

1. What is thesecondstep in allocating service department costs to production departments?

   Assign overhead costs that are directly attributable to a service or production department.

   Allocate other overhead costs based on appropriate cost drivers.

   Allocate service department costs to production departments.

   None of the answers is correct.

2 points

QUESTION 3

1. Rewards that come from outside the individual, such as rewards from a teacher, a parent, an organization, or a spouse that include grades, money, praise, and prizes are called

   traditional rewards.

   intrinsic rewards.

   extrinsic rewards.

   outside rewards.

2 points

QUESTION 4

1. Which of the following costs are the responsibility of investment center managers?

   costs only.

   revenues only.

   both costs and revenues.

   revenues, costs, and assets.

2 points

QUESTION 5

1. Why are incentive compensation plans often criticized?

   managers may take actions to improve short-run performance only.

   managers may take actions to improve long-run performance only.

   stock options affect market prices.

   they are ineffective in motivating managers.

2 points

QUESTION 6

1. Which of the following are components of deferred compensation?

   cash bonuses.

   profit sharing plans.

   special awards.

   stock options.

2 points

QUESTION 7

1. Which of these is adisadvantagefor compensating on future performance?

   a short-term orientation.

   a disincentive to invest in new technology.

   a focus of attention on the long-run.

   rewards that come too far in the future to be motivational.

2 points

QUESTION 8

1. For which types of operations do firms design operational planning and control systems?

   manufacturing operations only.

   marketing and manufacturing operations only.

   manufacturing and other activities but not marketing.

   manufacturing, marketing, and other activities.

2 points

QUESTION 9

1. Which of the following is the discount rate that discounts the future cash flows to a present value just equal to the initial investment?

   investment rate of return.

   external rate of return.

   internal rate of return.

   international rate of return.

2 points

QUESTION 10

1. Dougs Delivery Company Dougs Delivery Company reports the following information for 2010: Actual:

   	Output:	1,100 parcels picked up or delivered
   	Fuel required:	100 Gallons
   	Cost per gallon:	$2.00 per gallon

   Standard:

   	Fuel allowed:	0.10 gallon per parcel picked up or delivered
   	Cost per gallon:	$1.80 per gallon

   Refer to Dougs Delivery Company. What is the variable overhead variance for fuel costs?

   $20.00 U

   $20.00 F

   $2.00 U

   $2.00 F

2 points

QUESTION 11

1. When is the flexible budget is prepared?

   before the budget period begins.

   after the budget period begins, but before it ends.

   about half way through the budget period begins.

   after the budget period ends.

2 points

QUESTION 12

1. What is often the most difficult aspect of budgeting?

   forecasting sales because it involves considerable subjectivity.

   forecasting sales because it involves considerable objectivity.

   forecasting production requirements because it involves considerable subjectivity.

   forecasting production requirements because it involves considerable objectivity.

2 points

QUESTION 13

1. Which of the following statements iscorrectregarding marketing travel costs?

   Marketing travel costs are incurred for customer-related activities.

   Marketing travel costs are fixed in the long-term.

   Marketing travel costs are variable in the short-term.

   both a and b

2 points

QUESTION 14

1. How do decentralized companies that have many divisions doing diverse activities tend to weight the performance evaluation?

   more on each divisions performance and less on company-wide performance.

   less on each divisions performance and more on company-wide performance.

   on the stock market performance of the companys shares, only.

   equally between each divisions performance and company-wide performance.

2 points

QUESTION 15

1. Correll Company Correll Company has two divisions, A and B. Information for each division is as follows:

   Division	A	B
   Operating Profit	$40,000	$260,000
   Investment in Division	$100,000	$1,200,000
   Weighted Average Cost of Capital	12%	12%
   Profit Margin Percentage	10%	20%

   Refer to Correll Company. What is the return on investment for A?

   18%

   15%

   20%

   40%

2 points

QUESTION 16

1. When are cost allocation concepts appropriate?

   only as management deems appropriate.

   in manufacturing, nonmanufacturing, and service organizations.

   in allocating costs to production departments, but not from one service department to another.

   None of the answers is correct.

The calculation of the net present value of a proposed project doesnotrequire estimates of which of the following?

the amount of future cash flows.

the timing of future cash flows.

the cost of capital rate.

the amount of sunk costs already incurred.