The appropriate discount rate that analysts use in computing the present value of future
cash flows is composed of a pure interest rate, a premium for the risk of the investment,
an increase to reflect expected inflation. What is this rate is called?
A.risk-free rate.
B.real interest rate.
C.nominal interest rate.
D.none of the above.
Which of the following is a likely errors in the calculation of net present value?
A.the amount of cash flows
B.the timing of cash flows
C.the discount rate.
D.all of the above
Financial modeling can be used by managers for which of the following purposes?
A.staff rotation planning purposes.
B.analyzing financial relationships that are useful for decision making.
C.forecasting political unrest.
D.employee cross-training purposes.
Traditional managerial accounting systems need to be modified to support total quality
management by
A.reporting financial and nonfinancial information in more detail to aid in problem
solving.
B.having line employees collect financial and nonfinancial information and use it to get
timely feedback and solve problems.
C.basing rewards on quality and customer satisfaction measures of performance.
D.All of the answers are correct.
The internal focus on continuous improvement is the key to which of the following?
A.cutting costs.
B.increasing employee morale.
C.profit maximization.
D.cutting profits.
Which of these is the perspective of the balanced scorecard that is measured by
employee satisfaction, employee retention, and employee productivity?
A.financial perspective.
B.internal business and production process perspective.
C.learning and growth perspective.
D.customer perspective.
Julianna LLC is facing a make-or-buy decision and must decide whether to meet its
needs internally or to acquire goods or services from external sources. Julianna LLC
adopted an activity-based costing system and found that its overhead costs were more
than 50 percent of total product costs and the managers wanted to identify the activities
that drove overhead costs. Based on the cost of activities, the management decided to
outsource many of the activities that drove overhead costs. The expected result of this
action would be that
overhead costs cost of goods purchased from suppliers
A. decreased increased
B. decreased decreased
C. increased increased
D. increased decreased
Compare and discuss the advantages and disadvantages of the following performance
measures: ROI and EVA.
Which variance measures the efficiency with which the firm uses inputs to produce
outputs?
A.Throughput.
B.Efficiency.
C.Economy.
D.Effectiveness.
Narrative 5-1
The following question(s) refer to the this equation analyzing the relationship of total
cost to changes in machine hours. The following relationship was determined:
TC = $2,200 + $3X
Refer to Narrative 5-1. The independent variable is which of the following?
A.TC
B.$2,200
C.$3
D.X
If a company wishes to establish a factory overhead budget system in which estimated
costs can be derived directly from estimates of activity levels, which type of budget
should it prepare?
A.zero-based budget.
B.flexible budget.
C.discretionary budget.
D.fixed budget.
Why do fixed manufacturing cost variances occur?
A.Managers do not correctly anticipate changes in wage rates.
B.Poor materials are used in production.
C.Supervisors encounter scheduling problems.
D.Actual fixed costs differ from budgeted fixed costs.
A firm facing a make-or-buy decision must decide whether to meet its needs internally
or to acquire goods or services from external sources. Whether to make or buy depends
on which of the following factors?
A.cost factors.
B.dependability of suppliers.
C.quality of purchased materials.
D.All of the answers are correct.
What is the thirdstep in the activity analysis process used to implement Activity Based
Management?
A.Chart, from start to finish, the activities used to complete the product or service.
B.Classify activities as value-added or non-value-added.
C.Eliminate non-value-added activities.
D.Continuously improve and reevaluate the efficiency of value-added activities or
replace them with more efficient activities.
Activity-based management involves looking for ways to reduce
A.unused capacity.
B.value-added capacity.
C.income taxes.
D.employee morale.
The following is a measure for assessing how effectively management used the funds
invested and is the ratio of divisional sales to the investment in divisional assets.
A.profit margin percentage.
B.return on investment.
C.investment turnover ratio.
D.investment realization ratio.
Which of these is the perspective of the balanced scorecard that indicates whether the
company’s strategy and operations add value to shareholders?
A.financial perspective.
B.internal business and production process perspective.
C.learning and growth perspective.
D.customer perspective.
When can internal controls to prevent fraud can be ineffective?
A.When banking institutions go out of business or merge with other banking
institutions.
B.When standard operating procedures are followed.
C.When collusion exists between two or more employees.
D.When customers invoke the Foreign Corrupt Practices Act.
Activity-based costing first assigns costs to activities, then to
A.the products based on each product’s use of activities.
B.the plant based on each plant’s use of activities.
C.the departments based on each department’s use of activities.
D.the industry based on each industry’s use of activities.
Which of the following terms describes the optimal number of units to order or
produce?
A.economic order quantity.
B.effective order quantity.
C.efficient order quantity.
D.elastic order quantity.