[10/08, 16:48] +91 94640 73542: Which of the following is not considered a capital budgeting project?

a. Purchase of land on which to build a new factory

b. Purchase of a new packaging machine

c. Purchase of inventory to be sold in the future

d. Purchase of a new delivery truck to replace an old truck [10/08, 16:48] +91 94640 73542: A significant weakness of the high-low method is that the two data points chosen may not be representative of the relationship between cost and activity.

a. FALSE

b. TRUE [10/08, 16:50] +91 94640 73542: If the net present value is equal to zero, the project should be accepted.

a. FALSE

b. TRUE [10/08, 16:51] +91 94640 73542: A subunit that has responsibility for controlling costs, but does not have responsibility for generating revenue is a(n)

a. cost center.

b. investment center.

c. profit center.

d. value added center. [10/08, 16:51] +91 94640 73542: In a bottom-up approach to budgeting, the primary source of information used in setting the budget is

a. provided by the controller.

b. based on forecasted economic conditions.

c. based on industry forecasts.

d. provided by lower-level managers. [10/08, 16:54] +91 94640 73542: Which of the following is not a component of a time value of money calculation?

a. The time until the cash will be received

b. The opportunity costs of the alternative actions

c. The required rate of return

d. The amount of cash to be received [10/08, 16:55] +91 94640 73542: The person evaluating a manager should consider

a. any deviation from budgeted amounts as an item that should be investigated.

b. all favorable variances as indications of good performance.

c. that all unfavorable variances indicate poor performance.

d. that managers will focus their attention on those measures that they know will be part of their evaluation. [10/08, 16:55] +91 94640 73542: Absorption costing is another name for variable costing.

a. TRUE

b. FALSE [10/08, 17:04] +91 94640 73542: Avoidable costs are always relevant.

a. TRUE

b. FALSE [10/08, 17:04] +91 94640 73542: The formal documents that quantify a companys plans for achieving its goals are called

a. production reports.

b. cost sheets.

c. budgets.

d. variance reports. [10/08, 17:04] +91 94640 73542: The budget committee consists of

a. a companys stockholders.

b. senior managers, including the CEO and CFO.

c. all employees interested in providing input to the budgeting process.

d. representatives from the stockholders and suppliers. [10/08, 17:05] +91 94640 73542: Who is responsible for the approval of the master budget?

a. The companys auditors

b. The companys board of directors

c. The budget committee

d. The companys cost accountant [10/08, 17:35] +91 94640 73542: The total amount reported on an income statement for selling and administrative expenses the same amount regardless if variable of full costing is used.

a. TRUE

b. FALSE