ACCT 302 Week 4 Midterm exam NEW NEW NEW 2016
1. (TCO 9) Which one of the following stages of the management decision-making process is properly sequenced?
2. (TCO 9) When is incremental analysis most useful?
3. (TCO 9) Which of the following will never be a relevant cost?
4. (TCO 9) A company is deciding whether or not to replace some old equipment with new equipment. Which of the following is not considered in the incremental analysis?
5. (TCO 9) It costs Lannon Fields $14 of variable costs and $6 of allocated fixed costs to produce an industrial trash can that sells for $30. A buyer in Mexico offers to purchase 2,000 units at $18 each. Lannon has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income?
6. (TCO 9) Wishnell Toys can make 1,000 toy robots with the following costs:
Direct Materials $70,000
Direct Labor 26,000
Variable Overhead 15,000
Fixed Overhead 15,000
The company can purchase the 1,000 robots externally for $120,000. The avoidable fixed costs are $5,000 if the units are purchased externally. What is the cost savings if the company makes the robots?
7. (TCO 9) All of the following are relevant to the sell or process-further decision, except for __________
8. (TCO 8) Most of the capital budgeting methods use __________
9. (TCO 8) The capital budgeting decision depends in part on the __________
10. (TCO 8) The cash-payback technique __________
11. (TCO 8) All of the following statements about intangible benefits in capital budgeting are correct, except that they __________
12. (TCO 8) The profitability index __________.
13. (TCO 8) Post audits of capital projects __________
14. (TCO 8) A company has a minimum required rate of return of 9% and is considering investing in a project that costs $50,000 and is expected to generate cash inflows of $20,000 at the end of each year for 3 years. The profitability index for this project is __________
15. (TCO 8) Disadvantages of the annual rate of return method include all of the following, except that __________
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