1) An investment that costs $25,000 will produce annual cash flows of $5,000 for a period of 6 years. Further, the investment has an expected salvage value of $3,000. Given a desired rate of return of 12%, the investment will generate a (round your answer to the nearest whole dollar)
A. negative net present value of $2,923


B. positive net present value of $20,557


C. positive net present value of $1,520


D. negative net present value of $25,000

3) Britannia Company has two investment opportunities. A cash flow schedule for the investments is provided below:

Assuming capital rationing is used, which of the following techniques would be most appropriate for choosing between Investment A and Investment B?
A. Payback technique

B. Present value index

C. Net present value technique

D. None of these techniques apply 
4) Which of the following statements concerning payback analysis is true?


5) Select the incorrect statement concerning the internal rate of return (IRR) method of evaluating capital projects.


6) The rate of return that equates the present value of cash inflows and outflows is the


7) An investment that costs $5,000 will produce annual cash flows of $2,000 for a period of 4 years. Given a desired rate of return of 10%, the investment will generate a present value index of


8) An investment that cost $48,000 provided annual cash inflows of $9,000 per year for six years. The desired rate of return is 10%. The actual return from the investment was


9) Which of the following is the approximate internal rate of return for an investment that costs $45,880 and provides a $4,000 annuity for 20 years?

10) Yoplait Company employs material handling employees who move materials between production divisions at a labor cost of $160,000 a year. It is estimated that these employees move 75,000 pounds of material per year. If 6,000 pounds are moved in March, how much of the material handling cost should be assigned to products made in March?


11) Perrot Company has three divisions. For Perrot, a cost should be considered a direct cost if


12) Joint products A and B emerge from common processing that costs $80,000 and yields 5,000 units of Product A and 4,000 units of Product B. Product A can be sold for $100 per unit. Product B can be sold for $80 per unit. What amount of the joint costs will be assigned to Product A if joint costs are allocated on the basis of number of units produced?


13) When a particular job is completed in a job order cost system, the general journal entry would include a

) Moore Company uses process costing. The following information was available for October:

Ending inventory is 50% complete. Based on the information given, (A) above would be what amount?
A. $4,000

B. $2,000

C. $1,650

D. $1,500 
15) The Ragan Corporation uses a process cost system. The company started March with 2,300 units in Work in Process–Dept. A. During the month 4,000 units were started. At the end of the month there were 3,200 units in ending Work in Process–Dept. A inventory that were 30% complete. The beginning work in process balance was $240,540 and total manufacturing cost for the period was $608,000. Based on this information, the amount of cost transferred from Work in Process–Dept. A to Work in Process–Dept. B was


16) Brumlow Company has a contribution margin ratio of 25%. The company is considering a proposal that will increase sales by $100,000. What increase in profit can be expected assuming total fixed costs increase by $20,000?


17) Select the incorrect breakeven equation from the following:


18) A product has a contribution margin of $6 per unit and selling price of $20 per unit. Fixed costs are $18,000. Assuming new technology doubles the unit contribution margin but increases total fixed costs by $15,000, what is the breakeven point in units?

19) Which of the following items is not needed to prepare an inventory purchases budget for a merchandising business?


20) Which of the following budgets or schedules uses data contained in the selling and administrative expense budget?


21) Select the incorrect statement about the master budget.

22) Huntsville Company reported a $4,000 unfavorable direct labor price variance and a $1,500 favorable direct labor usage variance. Select the incorrect statement from the following.


23) When would a variance be labeled as favorable?


24) Gonzalez Company makes a product that is expected to use 1.2 pounds of material per unit of product. The material has a standard cost of $2 per pound. Gonzalez actually used 1.25 pounds of material per unit of product made in January. The actual cost of material was $1.95 per pound. Based on this information alone, the condition of the variances for the January production would be

25) You are considering an investment in Delta Airlines stock and wish to assess the firm's ability to generate earnings. All of the following ratios can be used to assess profitability except:


26) You are considering an investment in Coca Cola Company stock and wish to assess the firm's longterm debtpaying ability and its use of debt financing. All of the following ratios can be used to assess solvency expect:


27) You are considering an investment in IBM Company stock and wish to assess the firm's shortterm debtpaying ability. All of the following ratios are used to assess liquidity except:

28) Sometimes employees will deliberately overstate the amount of materials and/or labor that should be required to complete a job. The difference between inflated and realistic standards is known as


29) In monitoring process quality we might use which of the following statistics?


30) Which manager is usually held responsible for materials usage variances?

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