Please see the attached file for the fifty multiple choice questions.

1. A precondition for effective capital budgeting requires having: A) B) C) D) 2. A clearly defined mission A well-defined business strategy Long-range goals All of the above. Pickleball Company is considering the following investment proposal: Initial investment: Depreciable assets (straight-line) Working capital Operations (per year for 4 years): Cash receipts Cash expenditures Disinvestment: Salvage value of equipment Recovery of working capital Discount rate: $72,000 8,000 $50,000 22,000 $6,000 8,000 10 percent Additional information for interest rate of 10 percent and four time periods: Present value of $1 Present value of an annuity of $1 0.683 3.170 What is the net present value for the investment? A) $ 5,256 B) $18,322. C) $57,060 D) $65,256 3. Which of the following capital budgeting techniques provides the decision maker with answers expressed in dollars? A) Accounting rate of return B) Internal rate of return C) Net present value. D) Payback method 4. The internal rate of return: A) Does not require a predetermined discount rate B) Is often used to rank investment proposals C) May be compared to the cost of capital in project evaluation D) All of the above. 5. Read Publishing is considering the purchase of a used printing press costing $84,200. The printing press would generate a net cash inflow of $37,422 a year for 3 years. At the end of 3 years, the press would have no salvage value. The company's cost of capital is 10 percent. The company uses straight-line depreciation. The present value factors of an annuity of $1.00 for different rates of return are as follows: Period 2 3 4 8% 1.78 2.58 3.31 10% 1.74 2.49 3.17 Cost of Capital 12% 1.69 2.40 3.04 14% 1.65 2.32 2.91 16% 1.61 2.25 2.80 The investments internal rate of return (rounded to the nearest percent) is: A) 10 percent B) 16 percent. C) 14 percent D) 12 percent 6. If a company invests in a project with an internal rate of return higher than the company's cost of capital, the project should: A) Decrease the market value of the company's stock B) Have little or no effect on the market value of the company's stock C) Increase the market value of the company's stock. D) Reduce the weighted average cost of capital 7. A project under consideration has a net present value of $10,000 for a required investment of $60,000. There are no other investment options at this time. However, the assumed discount rate used to calculate the net present value is 20%. On the basis of this information alone, this project should: A) Definitely be rejected because $10,000 is only 17% of $60,000 B) Be rejected on the basis that the project loses $50,000 C) Probably be approved since the net present value is greater than zero. D) Be accepted if the cost of capital is greater than or equal to 20 percent 8. Clarinet Publishing is considering the purchase of a used printing press costing $38,400. The printing press would generate a net cash inflow of $20,000 a year for 5 years. At the end of 5 years, the press would have no salvage value. The company's cost of capital is 10 percent. The company uses straight-line depreciation. The investment's payback period in years (rounded to two decimal points) is: A) 2.56 B) 2.13 C) 1.92. D) 3.00 9. The following is a disadvantage of the payback period method: A) It is more complicated to calculate with unequal annual cash flows B) There is no consideration of cash flows after the payback period C) There is no consideration of the timing of cash flows D) Both A and B are disadvantages of this method. 10. The payback period method of evaluating investment projects is most appropriate: A) When a project is expected to lose money B) When it is used as the sole investment criterion C) When no information is available concerning the timing of cash inflows D) When rapid recovery of initial investment is a primary concern. 11. The accounting rate of return fails to consider the: A) Project's basic profitability B) Return of initial investment C) Timing of cash flows. D) All of the above 12. How is depreciation included in determining a project's NPV? A) Depreciation is a deduction in determining net operating cash inflows before computing NPV B) Depreciation is added to net operating cash inflows before computing NPV C) Depreciation is not a factor in determining a project's NPV D) Depreciation indirectly influences cash flows through effects on taxes. 13. When determining net present value, this is commonly done to consider the risks associated with a proposed investment: A) Decrease the discount rate used in the analysis B) Decrease the expected cash flows C) Increase the discount rate used in the analysis. D) Increase the required payback period 14. Sammy Corporation is considering an investment in equipment for $150,000 with a four-year life and no salvage value. Sammy uses the straight-line method of depreciation and is subject to a 34 percent tax rate. Over the life of the project, the total tax shield created by depreciation is: A) $ 25,000 B) $ 51,000. C) $ 40,800 D) $150,000 15. Next Step Company is a two-division firm and has the following information available for this year: Common fixed costs Direct fixed costs of Division A Direct fixed costs of Division B Sales revenue of Division A Sales revenue of Division B Variable costs of Division A Variable costs of Division B $ 800,000 200,000 400,000 1,200,000 1,800,000 240,000 360,000 What is Division A's contribution margin? A) $ 840,000 B) $ 960,000. C) $ 560,000 D) $(240,000) 16. The Durango Lumber Company had the following historical accounting data, per 100 board feet, concerning one of its products in the Sawmill Division: Finished shelving: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $60 32 16 24 The historical data is based on an average volume per period of 20,000 board feet. The shelving is normally transferred internally from the Sawmill Division to the Finishing Division. Durango may also sell the shelving externally for $180 per 100 board feet. The divisions are taxed at identical rates. Which of the following transfer pricing methods would lead to the highest Finishing Division income if 10,000 board feet are produced and transferred in entirety this period from Sawmill to Finishing? A) Market price B) All variable costs plus 50 percent markup. C) Full absorption costing plus 10 percent markup D) None of these methods generates a higher division income than another 17. What is a transfer price? A) The amount charged for a product or service that one division provides another. B) The amount charged for goods and services offered to the government C) An amount charged to cover the costs associated with import/export taxes D) The amount charged the final consumer to cover all costs incurred along the value chain 18. The optimal transfer price from the corporation's viewpoint is: A) The seller's variable cost plus the seller's opportunity cost. B) The amount that equals segment margin C) The seller's variable cost plus the buyer's opportunity cost D) The highest it can possibly obtain 19. Which of the following would normally not be included in an investment center's asset base? A) Accounts receivable B) Equipment C) Land for a future plant site. D) Inventory 20. If the International Division of Latin American Products had an investment turnover of 2.7 and a return on sales of 0.24, the return on investment would be: A) 26.7% B) 52.8% C) 64.8%. D) 384.0% 21. The return on investment is computed as: A) Operating income divided by sales B) Operating income divided by average operating assets. C) Sales divided by average operating assets D) Operating asset turnover divided by the operating income margin 22. Which of the following statements about a balanced scorecard is true? A) The advantage of a balanced scorecard approach is that it leads management to focus exclusively on critical downstream issues such as consumer demand, and away from lesser upstream issues such as design and production B) The advantage of a balanced scorecard approach is that it can best be used as a single, comprehensive measure of corporate performance C) The advantage of a balanced scorecard approach is that it eliminates the need for management accounting data D) The balanced scorecard gives managers a perspective of the organization's performance using a recurring set of criteria. 23. The approach toward management that considers the absence of significant differences between planned and actual results as an indication that everything is proceeding as planned is known as: A) The control principal B) The Peter principal C) Budget constraints D) Management by exception. 24. Standard costs: A) Indicate what it should cost to produce one unit of a product under efficient operating conditions B) Should be used in planning and controlling all costs C) Should be developed from average historical costs. D) Are determined by regulators 25. Assume that the standard cost to make one finished unit includes 2 hour of direct labor at $8 per hour. During April, 22,000 direct labor-hours were worked, 10,500 units of product were manufactured, and total direct labor cost was $160,000. What is the labor rate variance for April? A) $ 2,000 (U) B) $ 2,000 (F) C) $16,000 (U) D) $16,000 (F). 26. The difference between an actual cost number and the related standard cost number is: A) A discretionary cost B) An inflation adjustment C) A standard cost variance. D) Budget overrun 27. The objective of standard cost variance analysis is: A) To identify standard cost variances and to explain the reasons for their occurrences. B) To explore the reason or reasons for variation in sales prices of products offered in the company's main line of business C) To identify the standard deviation in budgeted numbers over a period of time D) To purge cost data of the effects of inflation 28. Which factor listed below is a cause for favorable materials quantity variances? A) Higher machine usage hours than anticipated B) Lower worker efficiency than anticipated C) Securing a more favorable price on materials than anticipated D) Using higher quality materials than required in the standard cost system. 29. The management of Mouser Manufacturing is analyzing variable overhead variances for the fiscal period just ended. The flexible budget called for $352,000 in variable overhead but actual variable overhead was $400,000. In computing the overhead variances, Mouser management discovered that it had used 80,000 pounds of direct material, rather than the budgeted amount of 88,000 pounds. (Pounds of direct material is the single overhead driver of variable overhead). The standard variable overhead rate per pound of direct material is $4.00. What is Mouser's variable overhead spending variance? A) $16,000 (F) B) $80,000 (U). C) $36,000 (U) D) $40,000 (U) 30. Leo Production Company has the following information: Standard fixed factory overhead rates per direct labor-hour Standard variable factory overhead rates per direct labor-hour Actual number of units produced Actual factory overhead costs (includes $70,000 fixed) Actual direct labor hours $3.00 $10.00 12,000 units $156,000 12,000 hours Standard factory overhead rates are based on a normal monthly volume of 10,000 units (1 standard direct labor-hour per unit). What is Leo's variable overhead efficiency variance? A) $ 6,000 (U) B) $ 4,000 (F) C) $ -0-. D) $10,000 (F) 31. Net sales volume variance will not be favorable: A) When actual units sold is greater than budgeted sales volume B) When actual units sold is less than budgeted sales volume. C) When the sales volume variance is favorable D) Under any of the above conditions 32. Which budgeting approach is often used when the relationships between inputs and outputs are weak or nonexistent? A) Incremental approach. B) Input/output approach C) Activity-based approach D) Minimum level approach 33. Which budgeting approach is used most often for service, manufacturing, and distribution activities where there exists a clearly defined relationship between effort and accomplishment? A) The continuous budgeting approach B) The input/output approach. C) The activity based approach D) Participation budgeting 34. Which budgeting approach is widely used in government and non-profit organizations? A) The continuous budgeting approach B) The input/output approach C) The incremental approach. D) Participation budgeting 35. Generally, the first of the following budgets to be prepared is the: A) Cash budget B) Operations budget C) Sales budget. D) Purchases budget 36. Jewelry Company has a sales budget for next month of $450,000. Cost of goods sold is expected to be 45 percent of sales. All goods are paid for in the month following purchase. The beginning inventory of merchandise is $20,000, and an ending inventory of $24,000 is desired. Beginning accounts payable is $206,500. The cost of goods sold for next month is expected to be: A) $160,000 B) $202,500. C) $360,000 D) $406,000 37. The Year 1 selling expense budget for Karin Corporation is as follows: Budgeted sales Selling costs: Delivery expenses Commission expenses Advertising expenses Office expenses Miscellaneous expenses Total $2,500,000 $25,000 75,000 20,000 12,000 30,000 $ 162,000 Delivery and commission expenses vary proportionally with budgeted sales in dollars. Advertising and office expenses are fixed. Miscellaneous expenses include $10,000 of fixed costs. The rest varies with budgeted sales in dollars. The Year 2 budgeted sales is $3,400,000. What will be the value for commission expenses in the Year 2 selling expense budget? A) $102,000. B) $ 24,000 C) $ 48,000 D) $122,000 38. Which of the following pairs of terms do not match? A) Continuous budgeting, perpetual budgeting B) Life-cycle budgeting, input/output approach. C) Participation budget, bottom-up approach D) Budgetary slack, "padding the budget" 39. For budgets to be successful, managers should do all of the following except: A) Encourage wide participation by all management levels B) Use budget performance reports to identify both good and poor performance C) Emphasize the importance of budgeting as a planning device to the employees D) Emphasize the importance of meeting the budget in order to receive performance raises. 40. Which of the following is a suggested technique for managing the budgeting process in a manner that increases employee motivation? A) Measure the budget against performance only when assessing poor performers B) Never alter the budget C) Top management should disassociate itself from the budget D) Emphasize the budget as a planning device. 41. When cost-based pricing is employed and markup is based on manufacturing costs, the markup must be sufficiently large enough to: A) B) C) D) Cover selling expenses, administrative expenses, and provide for the desired profit. Cover selling and administrative expenses Provide for the desired profit Cover selling expenses and provide for the desired profit 42. Periwinkle Manufacturing Company has the following budgeted costs for 10,000 units: Manufacturing Selling & Administrative Total Variable Costs $200,000 100,000 $300,000 Fixed Costs $ 75,000 25,000 $100,000 What is the markup on fixed costs needed to obtain a target profit of $125,000? A) 300.0 percent B) 400.0 percent C) 150.0 percent D) 425.0 percent. 43. Periwinkle Manufacturing Company has the following budgeted costs for 10,000 units: Manufacturing Selling & Administrative Total Variable Costs $200,000 150,000 $350,000 What is the markup on variable costs needed to break even? A) 28.6 percent. B) 150.4 percent C) 33.3 percent D) 300.0 percent 44. The word \"Kaizen\" is Japanese for: A) B) C) D) Materials pull Materials push Continuous improvement. Little cash Fixed Costs $ 75,000 25,000 $100,000 45. Cardinal Company allocates common Building Department costs to producing departments (A and B) based on space occupied, and it allocates common Personnel Department costs based on the number of employees. Space occupancy and employee data are as follows: Building Space occupied Employees Personnel Dept. A Dept. B 200 ft. 1,000 ft. 24,000 ft. 7,000 ft. 3 5 90 25 If Cardinal uses the direct allocation method, the ratio representing the portion of Personnel costs allocated to Department A is: A) 80/105 B) 90/115. C) 80/113 D) None of the above 46. The Kanban system developed by the Japanese is also known as: A) The material pull system. B) The weighted average system C) The activity driven system D) The automated ordering system 47. Which of the following procedures best describes activity-based costing? A) B) C) D) All overhead costs are recorded as expenses as incurred Overhead costs are assigned directly to products Overhead costs are assigned to activities; then costs are assigned to products. Overhead costs are assigned to departments; then costs are assigned to products 48. Which of the following is a true characteristic of activity-based costing? A) Activity-based costing uses a smaller number of cost pools than does organizational-based costing B) Relative to traditional costing methods, activity-based costing is more concerned with identifying processes and less concerned with causal factors of overhead costs C) Activity-based costing removes the use of judgment from the allocation process D) Activity-based costing cannot be used to assign costs unless the activity cost drivers of those costs are identified. 49. Which of the following is not included in work-in-process inventory? A) Direct materials costs B) Applied manufacturing overhead C) Direct manufacturing labor costs D) Sales commissions. 50. How is depreciation on the manufacturing building and equipment classified in financial reporting? A) As an irrelevant cost because it has already been incurred B) As a current expense C) As part of the cost of the products produced. D) As a period cost