When a company approaches market share growth under a build strategy,
a.The company aims to increase its market share in the industry, even at the expense of
short-term earnings and cash flow.
b.The company seeks to maintain its current market share but build its return on
investment.
c.The company seeks market share growth by purchasing companies exiting the market.
d.The company focuses on short-term profits and cash.
The balance sheet for Blan Corporation at the end of the current year indicates the
following:
Income before income taxes was $480,000 and income taxes expense for the current
year amounted to $144,000. Cash dividends paid on common stock were $300,000, and
the common stock was selling for $22 per share at the end of the year. There were no
ownership changes during the year.
Required:
Calculate each of the following:
a. Earnings per share
b. Price/earnings ratio
c. Dividend payout ratio
Bivouac Camping Supply sells harsh weather tents. The company has the following
income statement.
Required:
a. What is the contribution margin per unit?
b. What is the contribution margin ratio?
c. What is the breakeven point in units? In sales dollars?
d. What is the margin of safety in units? In dollars?
The variance that captures the effect of efficient use of the activity base on the cost of
variable overhead is the
a. Variable overhead spending variance.
b. Variable overhead efficiency variance.
c. Variable overhead volume variance.
d. None of these answer choices are correct.
When making the decision to replace an old factory machine with a new one, financial
and non-financial factors are considered. As with any investment, a company investing
in factory machinery expects that the new machinery will generate a future return.
Required:
a. Define the two types of returns that can be expected from investments in a long-term
asset such as factory machinery.
b. List three financial factors that a company might consider before making an
investment in factory machinery.
c. List three non-financial factors that a company might consider before making an
investment in factory machinery.
d. List one cost that is not included in a decision to replace an old factory machine with
a new one.
During the current year, ABC Corporation purchased land for $40,000. ABC also sold
equipment with a book value of $2,000 for $10,000. What amount is reported in ABC’s
investing section of its statement of cash flows?
a. $0
b. $30,000 net cash used by investing activities
c. $38,000 net cash provided by investing activities
d. $38,000 net cash used by investing activities
Which of the following is not a qualitative issue in a special order pricing decision?
a. Will it generate a positive contribution margin?
b. If the special order generates new business, will the customer purchase again at the
regular price?
c. If the special order uses a lower quality component that is used for regular orders,
will it negatively affect the company ‘s reputation?
d. All of these answer choices are qualitative issues in a special order pricing decision.
A firm’s ability to pay its obligations as they come due and to meet any unforeseen
needs for cash is called
a. Current ratio
b. Liquidity
c. Working capital
d. Accounts receivable turnover
Which of the following is not one of the four balanced scorecard perspectives?
a. Customer
b. Financial
c. Learning and growing
d. All of these answer choices are balanced scorecard perspectives
The flexible budget variance is influenced most heavily by actions of
a. The budget committee.
b. The operations personnel.
c. The sales personnel.
d. The executives of the company.
According to the theory of constraints, which of the following is not a step required to
maximize and improve the performance of a value chain?
a. Decide how to exploit the constraint.
b. Elevate the performance of the constraint.
c. Determine customer demand.
d. All of these answer choices are required steps.
Range Rider Industries manufactures chairs and tables that are in high demand by local
office furniture stores. Following is information for each of these products:
Range Rider has 900 machine hours available each month. The demand for chairs is
560 units per month and the demand for tables is 340 units per month. In order to
maximize the company ‘s total contribution margin, how should Range Rider allocate
its production capacity between the chairs and tables (if necessary, round partial units
down to the next nearest full unit)?
a. 562 Tables and 0 Chairs
b. 340 Tables and 222 Chairs.
c. 340 Tables and 560 Chairs.
d. 562 Chairs and 0 Tables.
The inventory turnover measures
a. How many days, on average, it takes between when an order is placed until the
inventory is shipped.
b. How many times, on average, a company’s inventory is sold during the year.
c. How many times, on average, the company takes to replace inventory during the
year.
d. How many days, on average, it takes between when inventory is received to its sale
to customers.
The Sphinx division of Shepherd Corporation generated division generated net
revenues of $12,000,000 and variable expenses of $7,700,000. If common corporate
fixed costs were $1,000,000 and the segment margin was $1,300,000, what are the
division ‘s direct fixed expenses?
a. $4,300,000
b. $3,000,000
c. $300,000
d. The answer cannot be determined from the information given.
Which of the following is an example of a variable cost for a bicycle manufacturer?
a.Rent
b.Insurance
c.Tires
d.Depreciation
Gil Jargon Corporation makes lawn mowers. The Battery division makes a battery that
the Electric Motor division needs for a new product. The Battery division ‘s variable
cost of manufacturing the battery is $16 per unit. The battery is also available on the
open market at a price of $21 per unit. The Electric Motor division needs 50,000
batteries per year.
Required
a. If the Battery Division has adequate excess capacity to supply the 50,000 batteries
what is the minimum transfer price?
b. If the Battery Division has adequate excess capacity to supply the 50,000 batteries,
what is the range of prices that is likely to be acceptable to both the Battery division and
the Electric Motor division?
Managerial accounting is used by managers to
a.Assure appropriate use of an organization ‘s resources.
b.Assure accountability for an organization ‘s resources.
c.Provide information used in planning, evaluation and controlling functions within an
organization.
d.All of these answer choices are correct.
Which of the following would be considered a product-level activity?
a. Product design changes
b. Quality tests
c. Preparing purchase orders
d. None of these answer choices are correct.
Jodi Jarvis won a $10 million lottery and elected to receive her winnings in 20 equal
annual installments. After receiving the first 10 installments, Jodi and her husband
divorced, and the remaining 10 payments became part of the property settlement. The
judge who presided over the divorce proceedings awarded one-half interest in the future
lottery payments to Jodi and the other half to her ex-husband. Following the divorce,
Jodi decided to sell her interest in the 10 remaining lottery payments to raise the cash
needed to open a bakery. An investor has offered Jodi $1,677,520.
Required
a. What discount rate did the investor use in calculating the purchase price?
b. If Jodi can invest the money she gets at 6%, which is the better option, keeping the
annuity or accepting the investor’s offer? Why?
c. What needs might Jodi have that would make the investor’s offer the preferable
option, no matter what the interest rate (within reason)?
What advantage does the DuPont model offer compared to the standard ROI
calculation?
a. It is simpler.
b. It is more accurate.
c. It helps identify the actions required to improve the ROI.
d. None of these answer choices are correct.