Question
For capital projects of differing dollar amounts, the best way to rank them is to use: A. net present value B. simple rate of return.
For capital projects of differing dollar amounts, the best way to rank them is to use:
A. net present value
B. simple rate of return.
C. payback.
D. the project profitability index.
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In setting a transfer price, which of the following should not be considered?
A. Fixed production costs of the buying division.
B. Production capacity of the selling division.
C. Product demand from outside customers.
D. Costs eliminated by internal transfers.
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Relevant costs in a make-or-buy decision analysis include:
A. unavoidable fixed costs
B. avoidable fixed costs
C. fixed factory overhead costs applied to products
D. fixed selling and administrative expenses
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Delmonte Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $31 to buy from farmers and $15 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $27 or processed further for $14 to make the end product industrial fiber that is sold for $44. The beet juice can be sold as is for $32 or processed further for $17 to make the end product refined sugar that is sold for $50.
Which of the intermediate products should be processed further?
A. beet fiber should NOT be processed into industrial fiber; beet juice should be processed into refined sugar
B. beet fiber should NOT be processed into industrial fiber; beet juice should NOT be processed into refined sugar
C. beet fiber should be processed into industrial fiber; beet juice should be processed into refined sugar
D. beet fiber should be processed into industrial fiber; beet juice should NOT be processed into refined sugar
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