Homework Questions

With in the relevant range:

a) Both total variables costs and total fixed costs will remain constant

b) Both total variables costs and total fixed costs change

c) Fixed costs per unit will remain constant and variable costs per unit will change

d) Variable costs per unit ill remain constant and fixed costs per unit will change

Conway Company sells three products: A,B and C. Product A's unit contribution margin is higher than Product B's and Products B's is higher than Product C's. Which one of the following independent events is most likely to increase the company's overall break-even point?

a) The installation of new automated equipment and subsequent lay-off of factory workers

b) A decrease in Product C's selling price

c) An increase in the overall market demand for Product B

d) A change in the relative market demand for the products, with the increase favoring Product C relative to Product B and Product A.

Which of the following statements regarding the manufacturing overhead budget is false?

a) Because some overhead costs are not cast outflows, total budget manufacturing overhead cost must be adjusted to determine the cash disbursements for manufacturing overhead.

b) In order to determine ending inventory of finished goods for the year, you must know anticipated sales for the first quarter of next year.

c) Beginning inventory of finished goods in the total column equals beginning inventory of finished goods in the quarter 4

d) None of the statements are true Caprice Company reported a favorable materials price variance and an unfavorable materials quanity variance. Based on the variances, you can conclude that:

a) The actual cost per u it of materials was less than the standard cost per unit

b) The actual usage of materials was less than the standard allowed

c) More materials were purchased than were used

d) More materials were used than were purchased

Which of the statements relating to operating performance measures if false?

a) Few organizations use a variety of nonfinancial performance measures in addition to financial measures.

b) The amount of time required to turn raw materials into completed products is called throughout time

c) Manufacturing cycle efficiency is computed by relating the value-added time to the throughput time

d) All of the above statements are true

The performance of the manager of Division D is measured by residual income. Which of the following would increase the manager's performance measure?

a) A decrease in the division's average operating assets.

b) A decrease in the division's net operating income.

c) An increase in the division's average operating assets.

d) An increase in the minimum required return.

The manage of a firm are in the process of deciding whether to accept or reject a special order for one products. A cost that is not relevant to their decision is the :

a) A common fixed overhead that will continue if the special offer is not accepted

b) Direct materials

c) Fixed overhead that will be avoided if the special offer is accepted

d) Variable overhead

Which of the following statement regarding opportunity costs is false?

a) Opportunity costs are not recorded in the organization's general ledger because they do not represent actual dollar outlays

b) Opportunity costs represent economic benefits that are forgone as a result of pursuing some course of action

c) Opportunity costs should not be considered in make or buy decisions

d) All of the statement are true

Which of the following statement is true?

a) The pay back period is the length of time that it takes for a project to recover it initial cost from the net cash inflows that it generates.

b) Projects with shorter payback periods are always more desirable than projects with longer payback periods.

c) The payback method of making capital budgeting decisions considers the time value of money.

d) All of the states are true.

Which of the following statement is false?

a) A investment with a  positive net present value is acceptable because it means the actual return on investment is greater than the required rate of return

b) An investment with a zero net present value is not acceptable because it means the actual return on investment is equal to the required rate of return

c) An investment with a negative net present value is  not acceptable because it means the actual return on investment is equal to the required rate of return

d) All of the statements are true.

In comparing two investments alternative, the difference between the net present value of the two alternatives obtained using the total-cost approach will be:

a) Less than the net present value obtained using the incremental cost approach

b) The same as the net present value obtained using the incremental cost approach

c) Greater than the net present value obtained using the incremental cost approach

d) Can not be determined