Question 12 pts

An investment that costs $68,000 will provide a return of $18,500 per year for each of the next five years. What is the net present value of the investment if the required rate of return in 8 percent?

$73,865

$6,000

$5,865

$17,636

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Question 22 ptsSkip to question text.

Maude Company's required rate of return on capital budgeting projects is 9%. The company is considering an investment which would yield a cash flow of $12,000 per year for five years. Ignoring taxes, what is the most that the company would be willing to invest in this project?

$46,674

$38,994

$60,000

$55,046

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Question 32 pts

How much would you have to deposit in the bank today so that you could withdraw $2,000 per year for 4 years earning 8%?

$1,470

$10,560

$5,880

$6,624

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Question 42 ptsSkip to question text.

A project with an initial cost of $62,000 is expected to produce cash flows of $14,000 per year and net income of $9,000 for each of the next 7 years. The asset has an estimated 10 year life and a $4,000 salvage value. What is the projected payback period?

4.42 years.

6.89 years.

1.56 years.

2.70 years.

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Question 52 pts

An investment of $36,510 promises to return $8,000 each year for the next 7 years. If taxes are ignored, what is the internal rate of return?

less than 9%

10%

12%

More than 14%

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Question 62 pts

An annuity is

the same as the payback period.

a series of equal payments.

necessary in order to calculate the net present value.

a method of calculating depreciation in order to provide a tax shield.

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Question 72 ptsSkip to question text.

Good Stuff Restaurant expects to make the following inventory purchases:

Month

Purchases

October	$80,000
November	100,000
December	160,000

During September, the restaurant purchased $72,000 of inventory. The restaurant typically pays for 25% of the inventory purchases within the month of the purchase and 75% in the following month. Estimate the cash disbursements that will be made in November for purchases related to inventory.

$95,000

$100,000

$85,000

$115,000

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Question 82 pts

Companies estimate sales by using

models developed by economists.

trends in their own sales data.

estimates from their sales force.

All of the above.

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Question 92 pts

The comprehensive planning document that incorporates a number of individual budgets is the

capital acquisitions budget.

master budget.

material purchases budget.

sales forecast.

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Question 102 pts

Management by exception refers to the practice of only investigating variances

in fixed costs.

where the actual amount exceeds the budget.

that are large in dollar amounts or relative to budgeted amounts.

in the operations managed by those who lack experience in the company.

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Question 112 pts

If beginning inventory consists of 2,000 units, sales are projected at 6,200 units, and the desired ending inventory is 1,600 units, how many units should be produced?

7,800

6,200

6,600

5,800

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Question 122 pts

The sales budget is based on assumptions about the

number of units to be sold and selling price per unit.

timing of cash receipts.

contribution margin per unit and the number of units to be sold.

costs of the units produced and the total fixed costs.

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Question 132 ptsSkip to question text.

Cringle Company expects sales as follows:

January	$100,000
February	$150,000
March	$180,000
April	$200,000

Sales are made 20% for cash, and 80% on credit. Credit sales are collected 60% in the month of sale and 40% in the next month. What are cash collections for March?

$170,400

$180,000

$36,000

$168,000

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Question 142 ptsSkip to question text.

Rockerfeller Company uses standard costing. Overhead is applied at $8 per unit produced. Data for the month of March follows:

Actual overhead costs	$67,000
Budgeted overhead fixed	42,000
Budgeted overhead variable per unit	$3
Actual units produced	8,700
Budgeted units to be produced	8,400

How much is the overhead volume variance?

$1,100 favorable.

$700 favorable.

$1,500 favorable.

$2,600 favorable .

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Question 152 pts

A possible cause for an unfavorable labor rate variance is

using attainable standards rather than ideal standards.

hiring new, inexperienced employees.

producing fewer units than had been planned.

using more experienced workers than planned.

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Question 162 ptsSkip to question text.

At Electrix, the standard price for the M640 electrical relay, a component used in the production of a commercial refrigeration unit, is $67. Standards call for two relays per refrigeration unit. In July, the company purchased 120 relays for $7,560. The company used 104 relays in the production of 50 refrigeration units, with four relays damaged in the installation process. The standard quantity of labor is 20 hours per refrigeration unit. The standard wage rate is $23. In July, the company incurred 1,020 labor hours at a cost of $22,950. How much is the labor rate variance?

$460 unfavorable.

$50 favorable.

$510 favorable.

$460 favorable.

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Question 172 ptsSkip to question text.

Washington Company has developed the following raw material standard for a single unit of one of its products, the Cruiser, 138.6 pounds of grotelite at a cost of $23.00 per pound. During a recent month, Washington purchased 36,000 pounds of grotelite at a cost of $25.00 per pound. The company used 35,000 pounds of grotelite to produce 250 Cruisers. How much is the material quantity variance?

$8,050 unfavorable.

$72,000 unfavorable.

$25,000 unfavorable.

$80,050 unfavorable.

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Question 182 pts

In a standard costing system

unfavorable variances are recorded; favorable variances are not recorded.

only variances large enough to be investigated under the company's management by exception policy are recorded.

the costs added to the inventory accounts are recorded at standard costs rather than actual costs.

the Work in Process Inventory account is not used.

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Question 192 ptsSkip to question text.

An automobile parts company has a standard material price of $2 per pound. In October the company produced 4,500 units using 6,000 pounds of material. The company experienced a favorable materials quantity variance of $1,200. How much is the standard quantity of materials per unit produced?

1.20 pounds.

1 pound.

2.4 pounds.

1.47 pounds.

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Question 202 pts

Rascal Company had sales of $650,000 and income (NOPAT) of $78,000. What is the company's profit margin?

8.0%

12.0%

7.4%

8.3%

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Question 212 ptsSkip to question text.

The following data pertains to the dress division of the Cross and Allan Company:

Sales	$1,000,000
Invested capital	$700,000
Net operating profit after taxes	$160,000
Minimum required return	15%

Residual income/(loss) is equal to:

$10,000

$24,000

$45,000

$55,000

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Question 222 ptsSkip to question text.

Bradstreet is a division of Kindling Products, Inc. For the most recent year, Bradstreet had net income of $16,000,000. Included in income was interest expense of $1,200,000. The operation's tax rate is 40 percent. Total assets of Bradstreet are $225,000,000, current liabilities are $40,000,000, and $35,000,000 of the current liabilities are noninterest-bearing. How much is return on investment for Bradstreet?

8.0%

8.8%

9.1%

7.4%

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Question 232 pts

Dot Company's Dental Division has invested capital of $1,200,000, sales of $3,600,000, net income of $70,000, and NOPAT of $60,000. What is the division's turnover as it relates to investment center performance evaluation?

0.33

5.00

1.67

3.00

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Question 242 pts

Transfer prices can be set based on

market prices.

variable costs.

full cost plus profit.

All of the above are methods used to set transfer prices.

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Question 252 ptsSkip to question text.

Kendrick Company reported the following results for August 2011:

Sales	$7,000,000
Investment turnover	1.25
Return on investment	30%

Given this information, how much is the company's invested capital?

$2,100,000

$8,750,000

$2,333,333

$5,600,000