Circle the letter of the best response. 1 . Which of the following is NOT an assumption of Cost-Volume-Profit analysis? A. Inventory levels will not change. B. Managers can classify each cost as either variable or fixed, and mixed costs can be broken down into their variable or fixed component. C. Revenues are linear throughout the relevant range of volume. D. Volume is not the only factor that affects costs. 2. If the sales price is $12, the variable cost is $3, the fixed cost is $10,000, and 10,000 units are produced, the contribution margin per unit is: A. $12. C. $9. B. $11. D. $1. 3. If the sales price is $13, the variable cost is $4, the fixed cost is $9,000, and 10,000 units are produced, the break-even in units is: A. 9,000. C. 818 B. 1,000. D. 750. 4. If the sales price is $12, the variable cost is $3, and the fixed cost is $9,000, the contribution margin ratio is: A. 100%. C. 75%. B. 92%. D. 83%. 5. If the sales price is $40, the variable cost is $26, and the fixed cost is $8,400, the break- even in sales dollars is: A. $ 8,400 C. $24,000. B. $15,600. D. $35,000. 6. If the sales price is $15, the variable cost is $5, the fixed cost is $11,000, and 11,000 units are produced, how many units need to be sold if the desired profit is $5,000? A 11,500 B. 8,500 C. 1,600 D. 50010. In the oost-volumeprot graph (below), what is represented by the point marked \"A\"? A. Operating loss area B. Operating income area C. Break-even point D. Fixed expenses In the cost-volume-prot graph (below), what is represented by the point marked \"B\"? A. Operating loss area B. Operating income area C. Break-even point D. Fixed expenses In the cost-volume-prot graph (below), what is represented by the point marked \"C\"? A. Operating loss area B. Operating income area C. Break-even point D. Fixed expenses In the oost-volumeprot graph (below), what is represented by the point marked \"D\"? A. Operating loss area B. Operating income area C. Break-even point D. Fixed expenses Which of the following is correct? A. Capital budgeting methods produce the same decision and their use is based on the information available. B. The internal rate of return method does not consider the time value of money. The net present value method considers the time value of money. C. D. The cost of capital is the company's desired rate of return. :1 Which of the following capital decision methods assumes that income is the same over the life of an investment? A. Accounting Rate of Return B. Internal Rate of Return C. Net Present Value D. Payback method Which of the following capital decision methods ignores the cash ows after the original investment is recovered? A. Accounting Rate of Return B. Internal Rate of Return C. Net Present Value D. Payback method Which of the following capital decision methods computes the project's unique rate of return and considers the time value of money? A. Accounting Rate of Return B. Internal Rate of Return C. Net Present Value D. Payback method Which of the following capital decision methods shows the excess or deciency of the asset's present value of net cash inows over its initial investment cost? A. Accounting Rate of Return B. Internal Rate of Return C. Net Present Value D. Payback method 7. 9. 10. Qemenza Company is considering the purchase of a new machine. The machine cost $227,500 and will generate a yearly cash inow of $35,000. What is the payback period? A. 5 years and 11 months B. 6 years and 6 months C. 7' years and 1 month D. 8 years and 3 months A manufacturing company purchased a new machine for $150,000. The machine will last ten years and will be depreciated using the straight-line method. The estimated salvage value of the machine is zero and should generate a yearly cash inow of $39,000. Ignoring taxes, what is the accounting rate of return? A. 14% B. 15% C. 16% D. 17% When converting from net cash inows to operating income, depreciation is: A. not considered in the computation. B. subtracted from net cash inows. C. added to net cash inows. D. subtracted from operating income. Which of the following statements is correct if the net present value of the investment is positive and the company is not under the constraint of capital rationing? A. Compute the proposals IRR. B. Compare the proposal to other proposals using the protability index. C. Reject the proposal. D. Accept the proposal. Ranking mutually exclusive investment proposals on the basis of IRR, NPV, and protability index methods A. will generally B. will always C. may D. will never give similar results. 28) Suppose Barnes 8: Noble Booksellers is considering investing in warehouse-management software that costs $500,000, has $50,000 residual value and should lead to cash cost savings of $120,000 per year for its five-year life. In calculating the ARR, which of the following gures should be used as the equation's denominator? A) $225,000 B) $500,000 C) $250,000 D) $275,000