1. Assume that Widgeon produced enough product with the highest contribution margin per unit to use 1,000 hours ofmachine time. Product demand does not warrant any more production of that product. What is the maximumadditional contribution margin that can be realized by utilizing the remaining 1,000 hours on the product with thesecond highest contribution margin per hour?

a. $35,000

b. $1,400

c. $4,000

d. $28,000

14. Decisions to install new equipment, replace old equipment, and purchase or construct a new building are examples of

1. sales mix analysis
2. variable cost analysis
3. capital investment analysis
4. variable cost analysis

15. Which of the following is a method of analyzing capital investment proposals that ignores present value?

a. internal rate of return

b. net present value

c. discounted cash flow

d. average rate of return

16. The amount of the average investment for a proposed investment of $120,000 in a fixed asset with a useful life of 4years, straight-line depreciation, no residual value, and an expected total net income of $21,600 for the 4 years, is

a. $30,000

b. $21,600

c. $5,400

d. $60,000

17. Hayden Company is considering the acquisition of a machine that costs $675,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual net cash flow of $150,000, and annual operating income of $87,500. What is the estimated cash payback period for the machine?

a. 3.5 years

b. 4 years

c. 4.5 years

d. 5 years

18. Which of the following is not an advantage of the average rate of return method?

a. easy to use

b. takes into consideration the time value of money

c. includes the amount of income earned over the entire life of the proposal

d. . emphasizes accounting income