1-Which of the following is likely to hinder the ability to identify the cause(s) of cost variances?

The potential for a single cause to impact multiple variances

The tendency for people to attribute unfavorable outcomes to themselves

Prompt variance reporting

Using multiple variances to evaluate performance

2-What is the proper treatment for increased Working Capital needs caused by a replacement decision?

Show it as an after tax minus in all time periods

Show it as an after tax minus in time period 0 and as an after tax plus in the last time period

Show it as a minus in all time periods

Show it as minus in time period 0 and plus in the last time period

3-Imagine you are at a Board meeting and have just presented your recommendation to invest in new machinery- your recommendation is based upon your computation of a large positive net present value (NPV).A Board member asked you to explain exactly what does this positive NPV mean or represent?

You would respond...

A positive NPV is the increase to cash flow expected over the life of the machine

A positive NPV is today's value of the expected excess of cash required for the return of and on the investment in the machine

A positive NPV is the increase to operating income expected over the life of the machine

A positive NPV is the future value of the expected excess of cash required for the return of and on the investment in the machine

4-Sensitivity analysis is used in long term decision making analysis to:

Determine the best way to maximize the net present value (NPV)

Estimate a project's internal rate of return (IRR)

Capture income tax consequences

Determine the amount that a variable affecting cash flows can change without changing the indicated decision (e.g., acceptance of a project)