10.The after-tax cost of debt for purposes of estimating a company's weighted-average cost of capital (WACC)

Select one:

a. Requires an estimate of the yield-to-maturity for long-term bonds.

b. Is equal to the pretax cost of debt times t, where t = income tax rate.

c. Is equal to the pretax cost of debt (1 - t), where t = income tax rate.

d. Is approximated by the firm's short-term borrowing rate.

e. Is estimated using the Capital Asset Pricing Model (CAPM).

11 Fresplanade Co. had the following historical collection pattern for its credit sales:

75% collected in the month of sale 12% collected in the first month after month of sale 8% collected in the second month after month of sale 3% collected in the third month after month of sale 2% uncollectible The sales on open account (credit sales) have been budgeted for the last six months of the year as shown below:

July	$72,000
August	$84,000
September	$96,000
October	$108,000
November	$120,000
December	$102,000

The estimated total cash collections by Fresplanade Co. during December from accounts receivable is:

Select one:

a. $113,160

b. $101,400

c. $143,640

d. $125,640

e. $102,420

12.Economic value added is calculated from:

Select one:

a. Average total assets, current liabilities, net income, and the cost of capital

b. EVA net income and EVA invested capital

c. Net income, cost of capital, and net assets

d. Net income and the cost of capital

e. EVA net income, the cost of capital, and EVA invested capital

13. Which of the following statements about nonfinancial indicators of quality is not true?

Select one:

a. They can be useful predictors of future financial performance

b. Generally speaking, they are more costly to generate than financial measures of quality

c. They are timelier than financial data

d. They are readily interpretable by operating personnel

e. They help to identify precise quality-related problems

14. Roncy Manufacturing uses enhanced powder plastics (EPP) to manufacture a high-pressure board, Dura-Plastic. Information concerning its operation in June was as follows:

Master Budget units of Dura-Plastic to manufacture	8,000
Units of Dura-Plastic actually manufactured	9,000
Budgeted amount of EPP to purchase	70,000	oz.
EPP material actually purchased	76,000	oz.
EPP material actually used in production	72,000	oz.
Standard cost of EPP actually used in production	$478,800
Standard quantity of EPP per unit of Dura-Plastic	7.5	oz.
Cost of EPP purchased	$574,560

The direct materials purchase-price variance is for June was:

Select one:

a. $63,700 unfavorable

b. $65,520 unfavorable

c. $69,160 unfavorable

d. $95,760 unfavorable

15.

Which of the following items would most likely not be incorporated into the calculation of a division's investment base when using the residual income (RI) or the return on investment (ROI) approach for performance measurement and evaluation?

Select one:

a. Fixed assets used in divisional operations

b. Land being held by the division as a site for a new plant in the future

c. Division inventories when division management exercises control over the inventory levels

d. Division accounts payable when division management exercises control over the amount of short-term credit utilized