QuestionQuestion 1Which of the following best describes an “opportunity cost”?
The distribution of all products to be sold
Costs that were incurred in the past and cannot be changed
Benefits foregone by not choosing an alternative course of action
Expected future costs that differs among alternatives
Question 2What is the name given to choosing among different alternative investments due to limited resources?
Question 3The practice of directing executive attention to important deviations from budgeted amounts is called management by:
Question 4The Mad Hatter Corporation reported the following income statement and balance sheet amounts and additional information for the end of the current year.
End of current year End of prior yearNet sales revenue (all credit) $ 1,200,000Cost of goods sold $ 725,000Gross profit $ 475,000Selling/general expenses $ 280,000Interest expense $ 42,000Net Income $ 153,000
Current assets $ 112,000 $ 82,000Long-term assets $ 505,000 $ 440,000Total assets $ 617,000 $ 522,000Current liabilities $ 57,000 $ 52,000Long-term liabilities $ 275,000 $ 245,000Common stockholders’ equity $ 415,000 $ 225,000Total liabilities and stockholders’ equity $ 617,000 $ 522,000Inventory and prepaid expenses account for $30,000 of the current year’s current assets.Average inventory for the current year is $25,000.Average net accounts receivable for the current year is $45,000.There are 40,000 shares of common stock outstanding.Total dividends paid during the current year were $37,000.The market price per share of common stock is $20.
What is the earnings per share for the current year?
Question 5Return on investment and revenue growth would be examples of:
internal business perspective.
learning and growth perspective.
Question 6Glow Sticks Corporation manufactures and sells glow-in-the-dark necklaces for $10 each. The company has the capacity to produce 25,000 necklaces in a year, but is currently producing and selling 20,000 necklaces per year. The company currently is incurring the following costs at its current production level of 20,000 necklaces:
Variable manufacturing costs $ 60,000Fixed manufacturing costs $ 90,000Variable selling and administrative costs $ 75,000Fixed selling and administrative costs $ 50,000An amusement park is interested in purchasing the excess capacity of 5,000 necklaces if it can receive a special price. This special order would not affect Glow Sticks Corporation’s regular sales or its cost structure. Glow Sticks Corporation’s profits would increase from this special order if the special order price per necklace is greater than:
Question 7Roberts Corporation has an ROI of 23%, total assets of $5,250,000, and current liabilities of $950,000. What is Roberts Corporation’s operating income?
Question 8The following information relates to Bonny Unlimited for the past two years.
Account Current year Prior yearNet sales (all credit) $250,000 $180,000Cost of goods sold $115,000 $110,000Gross profit $135,000 $ 70,000Income from operations $ 32,000 $ 30,000Interest expense $ 4,000 $ 7,000Net income $ 24,000 $ 18,000Cash $ 16,000 $ 14,000Accounts receivable, net $ 20,000 $ 31,000Inventory $ 52,000 $ 44,000Prepaid expenses $ 2,000 $ 1,000Total current assets $ 90,000 $ 90,000Total long-term assets $100,000 $120,000Total current liabilities $ 60,000 $ 90,000Total long-term liabilities $ 22,000 $ 78,000Common stock, no par,2,000 shares, market value $90 per share $ 40,000 $ 40,000Retained earnings $ 68,000 $ 2,000What is the current ratio for the current year?
Question 9Gutierrez Company budgeted 10,000 pounds of direct materials costing $21.50 per pound to make 5,000 units of product. The company actually used 10,200 pounds of direct materials costing $24.00 per pound to make the 5,000 units. What is the direct materials efficiency variance?
Question 10Which of the following types of analysis include common-sized financial statements?
Question 11Which of the following goals of a performance evaluation system is accomplished when a company’s actual results are compared to the results of competitors?
Motivating unit managers
Promoting goal congruence
Question 12Outdoor Creations sells its patio heaters for $300 each. Its variable cost is $220 per heater. Fixed costs are $40,000 per month for volumes up to 1,000 patio heaters. Above 1,000 heaters, monthly fixed costs are $62,000. What is the budgeted operating income at a level of 1,300 heaters per month?
Question 13(Present value tables are needed.) Miami Marine Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The company has narrowed their choices down to two: the B14 Model and the F54 Model. Financial data about the two choices follows.
B14 Model F54 ModelInvestment $ 320,000 $ 240,000Useful life (years) 8 8Estimated annual net cash inflows for useful life $ 75,000 $ 40,000Residual value $ 30,000 $ 10,000Depreciation method Straight-line Straight-lineRequired rate of return 14% 10%What is the total present value of future cash inflows from the B14 Model?
Question 14Zany Brainy projected current year sales of 50,000 units at a unit sale price of $20.00. Actual current year sales were 55,000 units at $22.00 per unit. Actual variable costs, budgeted at $15.00 per unit, totaled $14.00 per unit. Budgeted fixed costs totaled $400,000, while actual fixed costs amounted to $420,000. What is the sales volume variance for total revenue?
Question 15Which department listed below would most likely be responsible for a “direct material price variance”?
Question 16Green Garden Supply budgeted three hours of direct labor per unit at $10.00 per hour to produce 500 units of product. The 500 units were completed using 1,600 hours of direct labor at $10.50 per hour. What is the direct labor efficiency variance?
Question 17Which term below best describes “the comprehensive budget”?
Question 18Rong Company expects cash sales for July of $15,000, and a 20% monthly increase during August and September. Credit sales of $6,000 in July should be followed by 10% decreases during August and September. What are budgeted cash sales and budgeted credit sales for September?
$12,150 and $8,640
$18,000 and $5,400
$21,600 and $4,860
$13,500 and $7,200
Question 19Operating activities resulting from the sales of goods and services relate to:
the income statement.
retained earnings reported on the balance sheet.
assets and liabilities reported on the balance sheet.
net income on the retained earnings statement.
Question 20Vera Enterprises has in its inventory 1,000 damaged handbags that cost $20,000. The handbags can be sold in their present condition for $12,000, or repaired at a cost of $13,000 and sold for $31,000. What is the opportunity cost of selling the handbags in their present condition?
Question 21If a company decides to outsource and then has freed capacity, the decision on what to do with that freed capacity would be based upon:
unavoidable fixed costs.
avoidable fixed costs.
none of the above.
Question 22Which of the following is the correct order of the sections on a statement of cash flows?
Operating, financing, investing
Investing, operating, financing
Financing, investing, operating
Operating, investing, financing
Question 23Richol Corporation is considering an investment in new equipment costing $180,000. The equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $45,000 the first year, $65,000 the second year, and $90,000 every year thereafter until the fifth year. What is the payback period for this investment? The equipment has no residual value.
Question 24The Tandem division of the Great Adventures Cycles Company had the following results last year (in thousands).
Sales $ 4,000,000Operating income $ 480,000Total assets $ 2,000,000Current liabilities $ 300,000Management’s target rate of return is 10% and the weighted average cost of capital is 8%. Its effective tax rate is 40%.
What is the Tandem division’s Return on Investment (ROI)?
Question 25Horvath Corporation had beginning inventory of 22,000 units and expects sales of 76,500 units during the year. Desired ending inventory is 19,500 units. How many units should Horvath Corporation produce?
QuestionQuestion 1Which of the following best describes an “opportunity cost”? appeared first on WriteDen.
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QuestionQuestion 1Which of the following best describes an “opportunity cost”?