Bus 4061

Take Test: [u10q1] Unit 10 Quiz 1

QUESTION 1

1. A budget is best described as:

a.A master control device.

b.An informal statement of company future plans usually expressed in monetary terms.

c.The minimum acceptable performance level.

d.A formal statement of a company's future plans usually expressed in monetary terms.

4 points

QUESTION 2

1. A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is:

a.Management budgeting.

b.Master budgeting.

c.Activity-based budgeting.

d.Cash budgeting.

4 points

QUESTION 3

1. A company is considering a new project that will cost $19,000. This project would result in additional annual revenues of $6,000 for the next five years. The $19,000 cost is an example of:

a.A sunk cost.

b.An incremental cost.

c.A fixed cost.

d.An opportunity cost.

4 points

QUESTION 4

1. A company paid $200,000 10 years ago for a specialized machine that has no salvage value and is being depreciated at the rate of $10,000 per year. The company is considering using the machine in a new project that will have incremental revenues of $28,000 per year and annual cash expenses of $20,000. In analyzing the new project, the $10,000 depreciation on the machine is an example of:

a.Incremental cost.

b.Opportunity cost.

c.Out-of-pocket cost.

d.Sunk cost.

4 points

QUESTION 5

1. A cost that cannot be avoided or changed because it arises from a past decision and is irrelevant to future decisions is called:

a.A sunk cost.

b.An opportunity cost.

c.An incremental cost.

d.A uncontrollable cost.

4 points

QUESTION 6

1. A performance report compares the differences between:

a.Actual results and predicted results.

b.Actual results over several periods.

c.Predicted results over several levels of activity.

d.Predicted results over several periods.

4 points

QUESTION 7

1. A report based on predicted amounts of revenues and expenses corresponding to the actual level of output is called a:

a.Rolling budget.

b.Flexible budget.

c.Production budget.

d.Fixed budget.

4 points

QUESTION 8

1. An opportunity cost:

a.Is an unavoidable cost.

b.Requires a current outlay of cash.

c.Results from past managerial decisions.

d.Is the lost benefit of choosing an alternative course of action.

4 points

QUESTION 9

1. Capital budgeting decisions usually involve analysis of:

a.Cash outflows only.

b.Short-term investments only.

c.Long-term investments only.

d.Operating revenues.

4 points

QUESTION 10

1. Current assets minus current liabilities equals:

a.Profit margin

b.Financial leverage.

c.Working capital.

d.Current ratio.

4 points

QUESTION 11

1. Financial statements with data for two or more successive accounting periods placed in columns side by side, sometimes with changes shown in dollar amounts and percents, are referred to as:

a.Comparative statements.

b.Serial statements.

c.Controlling statements.

d.Successive statements.

4 points

QUESTION 12

1. In business decision making, managers typically examine the two fundamental factors of:

a.Risk and capital investment.

b.Risk and rate of return.

c.Risk and payback.

d.Payback and rate of return.

4 points

QUESTION 13

1. One of several ratios that reflects solvency includes the:

a.Acid-test ratio.

b.Times interest earned ratio.

c.Current ratio.

d.Days' sales in inventory.

4 points

QUESTION 14

1. Operating budgets include all the following budgets except the:

a.Sales budget.

b.Cash budget.

c.Selling expense budget.

d.Merchandise purchases budget.

4 points

QUESTION 15

1. The costs that should be incurred under normal conditions to produce a specific product or component or to perform a specific service are:

a.Variable costs.

b.Fixed costs.

c.Standard costs.

d.Period costs.

4 points

QUESTION 16

1. The difference between actual and standard cost caused by the difference between the actual price and the standard price is called the:

a.Price variance.

b.Volume variance.

c.Quantity variance.

d.Controllable variance.

4 points

QUESTION 17

1. The three most common tools of financial analysis are:

a.Financial reporting, ratio analysis, and vertical analysis.

b.Ratio analysis, horizontal analysis, and financial reporting.

c.Horizontal analysis, vertical analysis, and ratio analysis.

d.Trend analysis, financial reporting, and ratio analysis.

4 points

QUESTION 18

1. The usual starting point for preparing a master budget is forecasting or estimating:

a.Expenditures

b.Sales.

c.Production.

d.Income.

4 points

QUESTION 19

1. Under absorption costing, which of the following statements is not true?

a.Fixed inventory costs are treated in the same manner as they are under variable costing.

b.Over-production and inventory buildup can occur because of how managers are evaluated and rewarded

.c.The fixed costs per unit decline as more units are produced.

d.All manufacturing costs are assigned to products.

4 points

QUESTION 20

1. When evaluating a special order, management should:

a.Only accept the order if the incremental revenue exceeds all product costs.

b.Only accept the order if the incremental revenue exceeds fixed product costs.

c.Only accept the order if the incremental revenue exceeds total variable product costs.

d.Only accept the order if the incremental revenue exceeds regular sales revenue.

4 points

QUESTION 21

1. Which methods of evaluating a capital investment project ignore the time value of money?

a.Net present value and accounting rate of return.

b.Payback period and accounting rate of return.

c.Accounting rate of return and internal rate of return.

d.Internal rate of return and payback period.

4 points

QUESTION 22

1. Which methods of evaluating a capital investment project use cash flows as a measurement basis?

a.Net present value, accounting rate of return, and internal rate of return.

b.Internal rate of return, payback period, and accounting rate of return.

c.Accounting rate of return, net present value, and payback period.

d.Payback period, internal rate of return, and net present value.

4 points

QUESTION 23

1. Which of the following is a financial budget?

a.Budgeted balance sheet.

b.Production budget.

c.Capital expenditure budget.

d.Sales budget.

4 points

QUESTION 24

1. Which of the following is not a product cost?

a.Direct labor.

b.Indirect manufacturing costs.

c.Direct materials.

d.Advertising costs.

4 points

QUESTION 25

1. Which of the following statements is true?

a.A cost that is constant over all levels of production is a variable cost.

b.A per unit cost that is constant at all production levels is a variable cost per unit.

c.A per unit cost that is constant at all production levels is a fixed cost per unit.

d.Reported income under absorption costing is not affected by production level changes.