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# ACCT 505 Week 8 Final Exam (Version 2)

- A good example of a common cost which normally could not be assigned to products on a segmented income statement except on an arbitrary basis would be:
- Turnover is computed by dividing average operating assets into:
- A segment of a business responsible for both revenues and expenses would be called:
- All other things being equal, if a division’s traceable fixed expenses increase:
- In computing the margin in a ROI analysis, which of the following is used?
- Net operating income is defined as:
- Suppose a manager is to be measured by residual income. Which of the following will not result in an increase in the residual income figure for this manager, assuming other factors remain constant?
- During April, Division D of Carney Company had a segment margin ratio of 15%, a variable expense ratio of 60% of sales, and traceable fixed expenses of $15,000. Division D’s sales were closest to:
- Cable Company had the following results for the year just ended:
- The segment margin ratio in Store J was:
- Company A’s residual income is:
- Company A’s return on investment (ROI) is:
- If South wants a residual income of $50,000 and the minimum required rate of return is 10%, the annual turnover will have to be:
- How much is the return on the investment?
- Consider a decision facing a firm of either accepting or rejecting a special offer for one of its products. A cost that is not relevant is:
- A study has been conducted to determine if Product A should be dropped. Sales of the product total $200,000 per year; variable expenses total $140,000 per year. Fixed expenses charged to the product total $90,000 per year. The company estimates that $40,000 of these fixed expenses will continue even if the product is dropped. These data indicate that if Product A is dropped, the company’s overall net operating income would:
- Manor Company plans to discontinue a department that has a contribution margin of $24,000 and $48,000 in fixed costs. Of the fixed costs, $21,000 cannot be avoided. The effect of this discontinuance on Manor’s overall net operating income would be a(an):
- Manor Company plans to discontinue a department that has a contribution margin of $25,000 and $50,000 in fixed costs. Of the fixed costs, $21,000 cannot be eliminated. The effect on the profit of Manor Company of discontinuing this department would be:
- Green Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is:
- Pitkin Company produces a part used in the manufacture of one of its products. The unit product cost of the part is $33, computed as follows:
- Cardinal Company needs 20,000 units of a certain part to use in one of its products. The following information is available:
- Products A, B, and C are produced from a single raw material input. The raw material costs $90,000, from which 5,000 units of A, 10,000 units of B, and 15,000 units of C can be produced each period. Product A can be sold at the split-off point for $2 per unit, or it can be processed further at a cost of $12,500 and then sold for $5 per unit. Product A should be:
- The sunk cost in this situation is:
- How much of the unit product cost of $59.90 is relevant in the decision of whether to make or buy the part?
- If direct labor-hours is the company’s production constraint, then the three products should be produced in the order:
- If Austin chooses to produce 4,000 afghans each month, the change in the monthly net operating income as compared to selling 4,000 spindles of yarn is:
- What is the lowest price Austin should be willing to accept for one afghan as long as it can sell spindles of yarn to the outside market for $12 each?
- (Ignore income taxes in this problem.) How is depreciation handled by the following capital budgeting techniques?
- The payback method measures:
- The evaluation of an investment having uneven cash flows using the payback method:
- If the net present value of a project is zero based on a discount rate of sixteen percent, then the time-adjusted rate of return:
- (Ignore income taxes in this problem.) A company with $800,000 in operating assets is considering the purchase of a machine that costs $75,000 and which is expected to reduce operating costs by $20,000 each year. The payback period for this machine in years is closest to:
- (Ignore income taxes in this problem.) Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $450,000 and would have a ten-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $20,000 per year to operate and maintain, but would save $100,000 per year in labor and other costs. The old machine can be sold now for scrap for $50,000. The simple rate of return on the new machine is closest to:
- Perkins Company is considering several investment proposals, as shown below:
- (Ignore income taxes in this problem.) The following data pertain to an investment proposal:
- (Ignore income taxes in this problem.) Sam Weller is thinking of investing $70,000 to start a bookstore. Sam plans to withdraw $15,000 from the business at the end of each year for the next five years. At the end of the fifth year, Sam plans to sell the business for $110,000 cash. At a 12% discount rate, what is the net present value of the investment?
- The immediate cash outflow required for this project would be:
- The present value of all future operating cash inflows is closest to:
- The present value of the net cash flows (all cash inflows less all cash outflows) occurring during year 4 is:
- The present value of the net cash flows (all cash inflows less all cash outflows) occurring during year 6 is closest to:

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