1. The practice of delegating authority and responsibility is referred to as: (Points : 2) decentral

1.
The practice of delegating authority and responsibility is referred to as:
(Points : 2)

decentralization.
standard costing.
management by exception.
centralization of authority.

Question 2.
2.
Which of the following software applications is most suited for developing flexible budgets?
(Points : 2)

Database
Graphics
Spreadsheet
Word processing

Question 3.
3.
O’Donnell Company makes computer chips. Sam is manager of the
company’s maintenance department. Because his maintenance technicians
are so well trained in maintaining expensive and sensitive circuit board
stamping equipment, Sam has been authorized to contract to perform
maintenance for outside customers. In this company, the maintenance
department is likely organized as a(n):
(Points : 2)

cost center.
revenue center.
profit center.
investment center.

Question 4.
4.
Summer Company’s static budget is based on a planned activity
level of 25,000 units. Later, the company’s management accountant
prepared a budget based on 30,000 units. The company actually produced
and sold 29,000 units. In evaluating its performance, management should
compare the company’s actual revenues and costs to which of the
following budgets?
(Points : 2)

A budget based on 29,000 units.
A budget based on 30,000 units.
A budget based on 25,000 units.
Either A or C.

Question 5.
5.
Butler Company developed a static budget at the beginning of
the company’s accounting period based on an expected volume of 4,000
units: Per unitRevenue $4.00Variable costs 1.50Contribution margin $2.50Fixed costs 2.00Net income$0.50 If actual production totals 5,000 units, the flexible budget would show fixed costs of:
(Points : 2)

$10,000
$2 per unit
$8,000
none of the above

Question 6.
6.
A difference between the static budget based on planned
volume and a flexible budget prepared at actual volume is called a:
(Points : 2)

flexible budget variance.
volume variance.
production activity variance.
static budget variance.

Question 7.
7.
The kind of responsibility center that would be evaluated by
comparing the amount of income earned to the amount of assets invested
is a(n):
(Points : 2)

cost center.
asset center.
investment center.
profit center.

Question 8.
8.
A budget prepared at a single volume of activity is referred to as a:
(Points : 2)

strategic budget.
static budget.
standard budget.
flexible budget.

Question 9.
9.
When using residual income (RI) as a project-screening tool, management should accept a project if:
(Points : 2)

RI is negative.
RI is positive.
RI equals return on investment.
none of the above.

Question 10.
10.
Hansen Company reported the following information for 2010: Sales $787,000Average Operating Assets $375,000Desired ROI 9%Residual Income $ 11,250 The company’s operating income for 2010 was:
(Points : 2)

$37,080
$33,750
$45,000
$363,750

Question 11.
11.
Which of the following statements about ROI is false?
(Points : 2)

ROI is used to measure the performance of investment centers.
ROI = margin divided by investment turnover.
Trying
to maximize ROI can result in a conflict between the interest of a
particular manager and the interest of the business as a whole.
The book value of operating assets is frequently used as the investment base for calculating return on investment.

Question 12.
12.
An investment that costs $30,000 will produce annual cash
flows of $10,000 for a period of 4 years. Given a desired rate of return
of 8%, the investment will generate a:
(Points : 2)

positive net present value of $33,121.
positive net present value of $3,121.
negative net present value of $33,121.
negative net present value of $3,121.

Question 13.
13.
A cash flow that only occurs once is referred to as:
(Points : 2)

an annuity.
a lump sum.
a principal sum.
none of the above.

Question 14.
14.
What amount of cash must be invested today in order to have
$30,000 at the end of one year assuming the rate of return is 9%?
(Points : 2)

$22,727.28
$27,000.00
$27,522.94
$27,300.00

Question 15.
15.
Which of the following would be considered a cash inflow in determining the value of a capital investment?
(Points : 2)

Incremental revenues from increased productivity
Cost savings from a reduction in labor hours
A reduction in working capital commitments
All of the above are considered cash inflows

Question 16.
16.
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:
(Points : 2)

negative net present value of $25,000.
negative net present value of $2,923.
positive net present value of $20,557.
negative net present value of $1,520.

Question 17.
17.
Cash outflows related to a capital investment may include all of the following except:
(Points : 2)

opportunity costs associated with selecting a specific capital project.
outflows associated with the initial investment.
working capital commitments.
increases in operating expenses.

Question 18.
18.
Barney’s Bagels invested in a new oven for $12,000. The oven
reduced the amount of time for baking which increased production and
sales for five years by the following amounts of cash inflows: Year 1Year 2Year 3Year 4Year 5$8,000$6,000$5,000$6,000$5,000 Using the averaging method, the payback period for the investment in the oven would be:
(Points : 2)

5.0 years.
2.4 years.
2.0 years.
1.7 years.

Question 19.
19.
Tawanna is considering starting a small business. She plans
to purchase equipment costing $145,000. Rent on the building used by the
business will be $24,000 per year while other operating costs will
total $30,000 per year. A market research specialist estimates that
Tawanna’s annual sales from the business will amount to $90,000. Tawanna
plans to operate the business for 6 years. Disregarding the effects of
taxes, what will be the amount of annual net cash flow generated by the
business?
(Points : 2)

8,000
$54,000
$90,000
None of the above

Question 20.
20.
Which of the following does not represent an advantage of the
unadjusted rate of return over the payback method for evaluating
capital projects?
(Points : 2)

The unadjusted rate of return method considers the investment’s profitability.
The unadjusted rate of return method measures the recovery of the initial investment in the project.
The unadjusted rate of return is a percentage that can be compared to a stated hurdle rate.
All of the above are advantage.