Which of the following assets would not be included in average operating assets used to
calculate ROI?
a. Building
b. Equipment used in production
c. Equipment no longer in use
d. Factory machinery
Identify each of the following costs in terms of its cost behavior – variable, fixed,
mixed, or step.
a.The cost of ice cream at Baskin-Robbins
b.Electricity costs at Starbucks (base rate plus usage)
c.Sales manager who is paid a base salary plus a commission on sales over a specified
amount
d.Depreciation on factory equipment
e.The cost of fabric in making children’s pajamas at Carter’s
f.The cost of paint in manufacturing garden art
g.Wages of day care workers, assuming a ratio of one worker for every 15 children
h.Store managers salaries at Wal-Mart
i.Telephone plan with a base rate plus a specified amount per minute
j.Shipping charges based on 100 pound increments
Long-term investment decisions, including capital budgeting decisions, involve
outflows of cash at one time or more and inflows of cash at other times. Managers must
decide whether the inflows justify the outflows.
Required:
a. List three examples of cash inflows and three examples of cash outflows that might
be involved in making a capital budgeting decision.
b. Many capital budgeting decisions are made using present value calculations. What
three factors does present value depend on?
Classify each of the following items as a source or use of cash. Then classify each item
as a cash flow provided by an operating, investing, or financing activity. Place an X in
each appropriate column. Assume transactions involve cash unless otherwise stated.
Michael’s Industries reported net income of $10,000 and paid cash dividends of $2,000.
Changes in balanced sheet accounts for the year were as follows:
Based on the above information, what is the amount of net cash provided by
operations?
a. $1,000
b. $14,000
c. $19,000
d. $30,000
Office Equipment, Inc. manufactures custom filing cabinets. Alma Ortiz, president of
Office Equipment, Inc., has gathered the following cost information from the
company’s accounting records for the latest month of operations.
Required
a. Calculate the total period costs for the month.
b. Calculate the total product costs for the month.
c. Calculate the amount of manufacturing overhead incurred for the month.
The quality of assets is assessed through
a. Turnover ratios.
b. Working capital.
c. Current ratio.
d. Profitability ratios.
Which of the following cash flows results from an operating activity?
a. Purchasing an investment in another company
b. Issuing common stock
c. Receiving dividends on investment in another company
d. Repaying long-term debt
Which of the following cash flows results from a financing activity?
a. Receiving dividends on investment in another company
b. Repaying long-term debt
c. Purchasing an investment in another company
d. Receiving payment from a customer
Pro-forma financial statements are
a. Based on assumed rather than actual results.
b. Used only in analyzing what has occurred in the past.
c. Based on historical data.
d. Not a component of the master budget.
Unit 5-5 –
Morgan Company has provided you with the following information on an order it
received for fifty widgets. Listed below is the timeline for processing the order.
Required: a. Calculate the delivery cycle time. b. Calculate the manufacturing cycle
time. c. Calculate the manufacturing cycle efficiency.
Which of the following is not a factor that managers use in deciding whether to
investigate a variance?
a. Materiality.
b. The existence of a trend.
c. Whether combining several accounts with large offsetting variances results in a small
variance.
d. All of these answer choices are correct..
Which of the following is not a qualitative issue in a special order pricing decision?
a. Will accepting the special order require the hiring of extra workers or payment of
overtime?
b. Will accepting the special order result in the loss of regular customers?
c. Will it generate a positive contribution margin?
d. If the special order generates new business, will the customer purchase again at the
regular price?
The standard number of direct labor hours used in calculating the direct labor efficiency
variance is based on
a. The static budget.
b. The actual number of finished units produced.
c. The number of units on the production budget.
d. None of these answer choices are correct.
Dana owns her own real estate agency. She has been working hard to increase her client
base. She offers the most comprehensive advertising campaign in the city and it has
been paying off by the steady increase in the number of listings over the last several
months. However, Dana is concerned that her extensive cost for advertising is eating
into her profits. It is difficult to determine how much she spends on advertising for each
listing because some of her advertising sources are fixed amounts each month and
others are more variable in nature. She would like to analyze the following information
to determine how her advertising costs behave based on the number of listings.
If Dana believes she will have 52 listings in December, what is her expected cost for
advertising?
a.$34,310
b.$33,378
c.$33,580
d.$35,470
In preparing a common-size income statement, you express all revenue and expense
account as a percentage of
a. Net income.
b. Operating income.
c. Gross profit.
d. Net sales revenue.
Metro Boat Company produces custom-built house boats. Metro’s house boats generally
sell for prices between $85,000 and $125,000. Bob Smith, the football coach at State
University, has presented Metro with the amenities he wishes to have on his boat. Metro
has calculated that to build this boat to Bob’s specifications, materials, labor and
overhead would total $95,652. Bob does not want to pay more than $100,000. Metro
normally prices their house boats based on the total cost of construction plus 15%.
Required (round to the nearest dollar):
a. What price would Metro normally quote for the house boat Bob is requesting?
b. What is the target cost Metro would need to meet to sell the house boat for $100,000
at a 15% markup?
c. What could Metro do to meet the target cost in part b?
The position responsible for negotiating a volume discount would be
a. Purchasing agent.
b. Production manager.
c. Accounts payable supervisor.
d. None of these answer choices are correct.
An example of an external user is a
a.Company president.
b.Plant manager.
c.Payroll supervisor
d.Creditor.
You cannot easily use the annuity table method to calculate
a. The return on investment
b. The internal rate of return with uneven cash flows
c. Analyzing the purchase of a capital asset
d. You can use the annuity table method for all of these answer choices