19 of 25

Suppose Whole Foods is considering investing in warehouse-management software that costs $900,000; has $40,000 residual value; and should lead to cash cost savings of $180,000 per year for its 5-year life. In calculating the ARR, which of the following figures should be used as the equation's denominator?

	$220,000
	$180,000
	$40,000
	$900,000

Question

20 of 25

Managers should consider ________ when making any sort of decision.

	only variable costs
	sunk costs
	revenues that differ among alternatives
	only fixed costs

Question

21 of 25

Dandy's Family Fun Center bought new go-karts for its recreation facility. Their useful life is 5 years. The go-karts had a total cost of $3,000 and will generate $1,500 total cash inflows each year for the life of the go-karts. The payback period in years is closest to

	2.00.
	1.54.
	1.37.
	2.46.

Question

22 of 25

Which of the following terms is best described as "a measure of profitability computed by dividing the average annual operating income by the amount of the investment"?

	Accounting rate of return
	Internal rate of return
	Discount rate
	Net present value

Question

23 of 25

Yummy-Tummy Foods has the following information about its standards and production activity for November:

Actual manufacturing overhead cost incurred, $89,000

Standard manufacturing overhead:

Variable manufacturing overhead cost @ $4.00 per unit produced

Fixed manufacturing overhead cost @ $7.30 per unit produced ($80,300/11,000 budgeted units)

Actual units produced, 13,000

Assume the allocation base for fixed overhead costs is the number of units to be produced.

How much are the standard overhead costs allocated to actual production?

	$146,900
	$89,000
	$44,000
	$124,300

Question

24 of 25

Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but it currently produces and sells 75,000 seats per year. The following information relates to current production of seats:

Sale price per unit	$430
Variable costs per unit:
Manufacturing	$250
Marketing and administrative	$40
Total fixed costs:
Manufacturing	$760,000
Marketing and administrative	$200,000

If a special sales order is accepted for 3,500 seats at a price of $340 per unit and fixed costs increase by $11,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)

	Increase by $304,000
	Increase by $164,000
	Decrease by $164,000
	Increase by $175,000

Question

25 of 25

The Standard Quantity (SQ) of direct materials is calculated as the

	Standard Quantity (SQ) of input per unit times the number of units budgeted.
	budgeted quantity of units less the Standard Quantity (SQ) of units.
	number of units actually made times the direct materials price standard.
	Standard Quantity (SQ) of input per unit times the number of units actually made.