The budget committee in ABC company is discussing the nature and benefits of the master budget. In the master budget, a major drawback of using historical results for judging current performance is that ________.

Select one:

a. results may refer to a different manager

b. managers may have cooked the books

c. inefficiencies may be concealed in past results

d. past results may be inaccurate

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In cost volume profit analysis, If the selling price per unit increases, what is the effect on the breakeven point? (Assume no other changes.)

Select one:

a. The break-even point increases.

b. The break-even point is zero.

c. The break-even point decreases.

d. The break-even point remains the same.

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ABC manufacturing company is considering establishment of a new building and wants to use payback period in capital budgeting to evaluate this investment opportunity. Indicate which of the following statements about the payback model is not correct?

Select one:

a. The payback model provides a rough estimate of the riskiness of a project.

b. The payback model measures profitability.

c. The payback model measures how quickly investment dollars may be recouped.

d. The payback model does not consider cash flows after the payback period.