The practice of delegating authority and responsibility is referred to

Subject: Business    / Finance
Question
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. 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 3. 3. Which of the following software applications is most suited for developing flexible budgets? (Points : 2)
Database
Graphics
Spreadsheet
Word processing

Question 4. 4. Volume variances are computed for which of the following costs? (Points : 2)
Variable manufacturing costs only
Fixed manufacturing costs only
Variable selling and administrative costs only
Variable manufacturing and selling and administrative costs

Question 5. 5. 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 6. 6. When would a variance be labeled as favorable? (Points : 2)
When standard costs are equal to actual costs
When standard costs are less than actual costs
When expected sales are greater than actual sales
When actual costs are less than standard costs

Question 7. 7. Static and flexible budgets are similar in that: (Points : 2)
they both are prepared for multiple activity levels.
they both concentrate solely on costs.
they both are based on the same per unit variable amounts and the same total fixed costs.
none of the above.

Question 8. 8. The review of a capital budgeting decision to determine whether a project was accepted that should have been rejected is referred to as: (Points : 2)
a capital budget.
a preaudit.
a postaudit.
a capital review.

Question 9. 9. Which of the following would increase residual income? (Points : 2)
Decrease in operating income
Decrease in operating assets
Increase in the required ROI
Decrease in margin

Question 10. 10. Bilbo Company evaluates its managers on the basis of return on investment (ROI). Division Three has an ROI of 15% while the company as a whole has an ROI of only 10%. Which of the following performance measures will motivate the managers of Division Three to accept a project earning a 12% return? (Points : 2)
Return on investment (ROI)
Residual income (RI)
Both ROI and RI will motivate the manager to accept the project
Neither ROI nor RI will motivate the manager to accept the project

Question 11. 11. 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 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. All of the following arecapital investment decisions except: (Points : 2)
purchasing $40,000 of machinery.
buying a $4,000,000 manufacturing plant.
acquiring $400,000 of common stock.
paying $500,000 to renovate a retail store.

Question 16. 16. Which statement characterizes the time value of money concept? (Points : 2)
The future value of a present dollar is less than one dollar.
The present value of a future dollar is less than one dollar.
The timing of cash flows is not relevant to decision making.
None of the above.

Question 17. 17. An investment that cost $48,000 provided annual cash inflows of $9,000 per year for six years. The desired rate of return is 10%. The actual return from the investment was: (Points : 2)
less than the desired rate of return.
equal to the desired rate of return.
greater than the desired rate of return.
the answer cannot be determined from the information provided.

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 1    Year 2    Year 3    Year 4    Year 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. An even stream of payments over equal time periods where the cash flows are assumed to occur at the end of each period is referred to as a(n): (Points : 2)
annuity due.
ordinary annuity.
post-annuity.
pre-annuity.

Question 20. 20. What amount of cash would result at the end of one year, if $17,000 is invested today and the rate of return is 10%? (Points : 2)
$17,000
$18,530
$18,700
None of the above

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