Question 1. 1. (TCO 1) Which one of the following is not a benefit of budgeting? (Points : 5)

It facilitates the coordination of activities. It provides definite objectives for evaluating performance. It provides assurance that the company will achieve its objectives. It provides early warning signs of potential threats.

Question 2. 2. (TCO 2) Which of the following is not a quantitative forecasting method? (Points : 5)

Moving average model Classical decomposition Delphi method Simple regression

Question 3. 3. (TCO 3) Which of the following statements regarding the t-statistic is true? (Points : 5)

The t-statistic cannot be negative. The t-statistic measures how many standard errors the coefficient is away from the independent variable. The higher the t-value, the more confidence we have in the coefficient. Low t-values indicate high reliability.

Question 4. 4. (TCO 4) Which of the following statements regarding the risk associated with R & D activities is incorrect? (Points : 5)

The amount of time between the R & D activity and the cash flows from the project does not affect risk. Greater risk is associated with creating new products than with improving existing products. Risk increases as the time between the R & D activity and the cash flows from the project increases. Assessing risk is a vital part of research and development.

Question 5. 5. (TCO 5) Program budgeting does not include _____. (Points : 5)

controlling programming budgeting planning

Question 6. 6. (TCO 6) The payback period technique _____. (Points : 5)

should be used as a final screening tool can be the only basis for the capital budgeting decision is relatively easy to compute and understand considers the expected profitability of a project

Question 7. 7. (TCO 6) The accounting rate of return method is based on _____. (Points : 5)

income data the time value of money data market values cash flow data

Question 8. 8. (TCO 6) A project that cost $80,000 with a useful life of 5 years is being considered. Straight-line depreciation is being used and salvage value is $5,000. The project will generate annual cash inflows of $21,375. The accounting rate of return is _____. (Points : 5)

26.7% 45.5% 7.8% 18.74%

Question 9. 9. (TCO 6) If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its 10-year life, and generates annual net cash inflows of $30,000 each year, the payback period is _____. (Points : 5)

5 years 6 years 7 years 8 years

Question 10. 10. (TCO 6) Munson Inc. is comparing several alternative capital budgeting projects as shown below.

Projects	A	B	C
Initial Investment	$150,000	$55,000	$95,000
Present value of cash inflows	$200,000	$65,000	$100,000

Using the profitability index, rank the projects, starting with the most attractive. (Points : 5)

A, C, B A, B, C C, A, B C, B, A

Question 11. 11. (TCO 6) A company has a minimum required rate of return of 9%. It is considering investing in a project that costs $175,000 and is expected to generate cash inflows of $70,000 at the end of each year for 3 years. The approximate net present value of this project is _____. (Points : 5)

$177,170 $35,000 $17,718 $2,191

Question 12. 12. (TCO 7) Which one of the following is not needed in preparing a production budget? (Points : 5)

Budgeted unit sales Budgeted raw materials Beginning finished goods units Ending finished goods units

Question 13. 13. (TCO 7) If the required materials to be purchased are 18,000 pounds, the production needs are three times the direct materials purchases, and the beginning direct materials are three and a half times the direct materials purchases, what are the desired ending direct materials in pounds? (Points : 5)

45,000 9,000 27,000 18,000

Question 14. 14. (TCO 8) A variance that results from expected economic conditions that do not materialize is called what? (Points : 5)

Sales variance Planning variance Economic variance Material variance

Question 15. 15. (TCO 9) A static budget is appropriate in evaluating a manager's performance if _____. (Points : 5)

actual activity closely approximates the master budget activity actual activity is less than the master budget activity the company prepares reports on an annual basis the company is a not-for-profit organization

Question 16. 16. (TCO 9) If the activity level increases 10%, total variable costs will _____. (Points : 5)

remain the same increase by more than 10% decrease by less than 10% increase 10%

Question 18. 18. (TCO 10) What is the method used to determine whether the budgeting process is operating effectively? (Points : 5)

Budget evaluation Budget review Budget appraisal Budget audit

False rldbqn=1 140046568 79195891 1 MultipleSections NavigateFreely False False / main/ CourseMod Question 1. 1. (TCO 1) Which one of the following is not a benefit of budgeting? (Points : 5) It facilitates the coordination of activities. It provides definite objectives for evaluating performance. It provides assurance that the company will achieve its objectives. It provides early warning signs of potential threats. Question 2. 2. (TCO 2) Which of the following is not a quantitative forecasting method? (Points : 5) Moving average model Classical decomposition Delphi method Simple regression Question 3. 3. (TCO 3) Which of the following statements regarding the t-statistic is true? (Points : 5) The t-statistic cannot be negative. The t-statistic measures how many standard errors the coefficient is away from the independent variable. The higher the t-value, the more confidence we have in the coefficient. Low t-values indicate high reliability. Question 4. 4. (TCO 4) Which of the following statements regarding the risk associated with R & D activities is incorrect? (Points : 5) The amount of time between the R & D activity and the cash flows from the project does not affect risk. Greater risk is associated with creating new products than with improving existing products. Risk increases as the time between the R & D activity and the cash flows from the project increases. Assessing risk is a vital part of research and development. Question 5. 5. (TCO 5) Program budgeting does not include _____. (Points : 5) controlling programming budgeting planning 0 1439250247 MultipleChoice 15 Question 6. 6. (TCO 6) The payback period technique _____. (Points : 5) should be used as a final screening tool can be the only basis for the capital budgeting decision is relatively easy to compute and understand considers the expected profitability of a project 0 1439250248 MultipleChoice 16 Question 7. 7. (TCO 6) The accounting rate of return method is based on _____. (Points : 5) income data the time value of money data market values cash flow data 0 1439250249 MultipleChoice 21 Question 8. 8. (TCO 6) A project that cost $80,000 with a useful life of 5 years is being considered. Straight-line depreciation is being used and salvage value is $5,000. The project will generate annual cash inflows of $21,375. The accounting rate of return is _____. (Points : 5) 26.7% 45.5% 7.8% 18.74% 0 1439250250 MultipleChoice 23 Question 9. 9. (TCO 6) If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its 10-year life, and generates annual net cash inflows of $30,000 each year, the payback period is _____. (Points : 5) 5 years 6 years 7 years 8 years 0 1439250251 MultipleChoice 27 Question 10. 10. (TCO 6) Munson Inc. is comparing several alternative capital budgeting projects as shown below. Projects A B C Initial Investment $150,000 $55,000 $95,000 Present value of cash inflows $200,000 $65,000 $100,000 Using the profitability index, rank the projects, starting with the most attractive. (Points : 5) A, C, B A, B, C C, A, B C, B, A 0 1439250252 MultipleChoice 30 Question 11. 11. (TCO 6) A company has a minimum required rate of return of 9%. It is considering investing in a project that costs $175,000 and is expected to generate cash inflows of $70,000 at the end of each year for 3 years. The approximate net present value of this project is _____. (Points : 5) $177,170 $35,000 $17,718 $2,191 0 1439250253 MultipleChoice 32 Question 12. 12. (TCO 7) Which one of the following is not needed in preparing a production budget? (Points : 5) Budgeted unit sales Budgeted raw materials Beginning finished goods units Ending finished goods units 0 1439250254 MultipleChoice 36 Question 13. 13. (TCO 7) If the required materials to be purchased are 18,000 pounds, the production needs are three times the direct materials purchases, and the beginning direct materials are three and a half times the direct materials purchases, what are the desired ending direct materials in pounds? (Points : 5) 45,000 9,000 27,000 18,000 0 1439250255 MultipleChoice 37 Question 14. 14. (TCO 8) A variance that results from expected economic conditions that do not materialize is called what? (Points : 5) Sales variance Planning variance Economic variance Material variance Question 15. 15. (TCO 9) A static budget is appropriate in evaluating a manager's performance if _____. (Points : 5) actual activity closely approximates the master budget activity actual activity is less than the master budget activity the company prepares reports on an annual basis the company is a not-for-profit organization 0 1439250257 MultipleChoice 44 Question 16. 16. (TCO 9) If the activity level increases 10%, total variable costs will _____. (Points : 5) remain the same increase by more than 10% decrease by less than 10% increase 10% 0 1439250259 MultipleChoice 50 Question 18. 18. (TCO 10) What is the method used to determine whether the budgeting process is operating effectively? (Points : 5) Budget evaluation Budget review Budget appraisal Budget audit 0 1439250260 MultipleChoice 52