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Study Resources (Accounting)

16) If Arthur Godfried invests $1,000 today at a rate of 7% compounding yearly, what will the value of the investment be in 4 years? Future Value of $1 4% 5% 6% 7% 8% 9% 1 1.040 1.050 1.060 1.070 1.080 1.090 2 1.082 1.103 1.124 1.145 1.166 1.188 3 1.125 1.158 1.191 1.225 1.260 1.295 4 1.170 1.216 1.262 1.311 1.360 1.412 5 1.217 1.276 1.338 1.403 1.469 1.539 6 1.265 1.340 1.419 1.501 1.587 1.677 7 1.316 1.407 1.504 1.606 1.714 1.828 8 1.369 1.477 1.594 1.718 1.851 1.993 9 1.423 1.551 1.689 1.838 1.999 2.172 10 1.480 1.629 1.791 1.967 2.159 2.367 A) $1,311 B) $1,967 C) $1,316 D) $1,000 Answer:  A Explanation:  A) Calculations:  1.311 × $1,000 = $1,311 Diff: 2 LO:  21-3 EOC Ref:  S21-8 AACSB:  Analytic Skills AICPA Business:  Critical Thinking AICPA Functional: .
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18) Argyle sells steel beams to building contractors in two sizes-regular and heavy.  Argyle sells 4 regular beams for every one heavy beam.  Cost data are as follows: Regular Heavy Price per unit $20.00 $28.00 Variable cost per unit $16.00 $20.00 Argyle's fixed costs are $2,880 per month.  How much is the breakeven point in.
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8) Potlatch Company manufactures sonars for fishing boats.  Model 100 sells for $200.  Potlatch produces and sells 5,000 of them per year.  Cost data are as follows: Variable manufacturing $105.00 Per unit Variable marketing $5.00 Per unit Fixed manufacturing $270,000 Per year Fixed marketing & admin $140,000 Per year A potential deal has come up for a one time.
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19) A company has two different products that sell to separate markets.  Financial data are as follows: Product A Product B Total Revenue $12,000 $8,000 $20,000 Variable cost ($7,500) ($8,100) ($15,600) Fixed cost (allocated) ($3,000) ($1,000) ($4,000) Operating income $1,500 ($1,100) $400 Assume that fixed costs of $500 could be eliminated if product B was dropped; assume furthermore that dropping one product would not impact.
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29) Arquebus Company is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen and collectors.  He is currently producing 40 flintlock muskets per month.  Cost data are as follows: Price$720 per unit Variable cost$470 per unit Fixed costs$8,000 per month How much is his margin of safety expressed.
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28) Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, and is currently producing and selling 20,000 sails per year. The following information relates to current production: Sale price per unit $150 Variable costs per unit:     Manufacturing 55     Marketing and administrative 25 Total fixed costs:     Manufacturing $640,000     Marketing and.
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21) Juan Martinez played classical guitar professionally until his motorcycle accident left him disabled.  After long months of therapy, he hired an experienced luthier (maker of stringed instruments) and opened a small shop that makes and sells Spanish guitars.  The guitars sell for $600, and the fixed monthly operating costs.
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45) Please refer to the following data concerning 4 investment alternatives: Project A Project B Project C Project D Initial investment $210,000 $400,000 $550,000 $1,000,000 PV of cash inflows $285,000 $490,000 $800,000 $990,000 Payback period (years) 7.2 6.0 9.5 2.0 NPV of project $75,000 $90,000 $250,000 ($10,000) Which project has the highest profitability index? A) Project A B) Project B C) Project C D).
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31) Orleans Company has a normal range of production volumes between 100,000 units and 180,000 units per month.  That is considered the relevant range for production cost analysis.  If the company expands significantly beyond 180,000 units per month, which of the following would be the most likely expectation? A) The fixed.
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Learning Objective 22-1 1) Budgeting is a technique that is used to plan for future cash inflows and outflows. 2) A goal of the budgeting process is to assist managers with coordinating and implementing the business plan. 3) Budgets provide benchmarks that help managers evaluate performance. 4) A goal of the budgeting process.
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11) In making a short-term decision, which of the following is MOST important? A) Separate variable costs from fixed costs B) Focus on total costs C) Use a conventional absorption costing approach D) Focus on the bottom line net income 12) Which of the following describes a sunk cost? A) One that is relevant to a.
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11) Which of the following BEST describes a post-audit? A) An audit of an operating unit of a company B) An audit performed after financial statements have been issued C) An analysis of an investment's cash flows prior to committing to the initial investment D) An analysis of an investment that is made after.
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9) Juan Martinez played classical guitar professionally until his motorcycle accident left him disabled.  After long months of therapy, he hired an experienced luthier (maker of stringed instruments) and opened a small shop that makes and sells Spanish guitars.  The guitars sell for $600, and the fixed monthly operating costs.
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14) The cost of inspection at various stages of production is an example of what type of cost? A) Appraisal cost B) External failure cost C) Prevention cost D) Internal failure cost 15) The cost of reengineering the production process to reduce defect rate is an example of which of the following? A) Internal failure cost B).
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21) Which of the following describes the purpose of a post-audit? A) To screen initial investment alternatives B) To determine whether investments are going as planned, or whether they should be abandoned C) To determine the amount of the initial investment outlay D) To evaluate the company's internal controls Answer:  B Diff: 1 LO:  21-1 EOC Ref:  S21-1 AACSB: .
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Learning Objective 20-4 1) Dong Fang Company fabricates inexpensive automobiles for sale to 3rd world countries.  Each auto includes one wiring harness, which is currently made in-house.  Details of the harness fabrication are as follows: Volume 900 Units per month Variable cost per unit $8.00 Per unit Fixed costs $14,000 Per month A factory in Indonesia.
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21) Dong Fang Company fabricates inexpensive automobiles for sale to 3rd world countries.  Each auto includes one wiring harness, which is currently made in-house.  Details of the harness fabrication are as follows: lume 900 Units per month Variable cost per unit $8.00 Per unit Fixed costs $14,000 Per month A factory in Indonesia has offered to.
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29) A company is evaluating 3 possible investments.  Each uses straight-line depreciation.  See data below: Project A Project B Project C Investment $400,000 $20,000 $100,000 Salvage value $0 $2,000 $5,000 Net cash flows:    Year 1 $100,000 $10,000 $40,000    Year 2 $100,000 $8,000 $25,000    Year 3 $100,000 $5,000 $30,000    Year 4 $100,000 $3,000 $10,000    Year 5 $100,000 $0.
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29) Which of the following statements describes a scenario when management should consider dropping a business division? A) The division has consistently reported an operating loss. B) The division's avoidable fixed costs are less than its contribution margin. C) The division's avoidable fixed costs are greater than its contribution margin. D) The division's unavoidable.
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9) The rate of return is the only capital budgeting method that uses accrual accounting. Answer:  TRUE Diff: 1 LO:  21-2 EOC Ref:  E21-17 AACSB:  Analytic Skills AICPA Business:  Critical Thinking AICPA Functional:  Measurement 10) The rate of return calculations ignores the time value of money, but the payback period does include consideration of the time value of.
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19) Logan, Inc. is evaluating two possible investments in depreciable plant assets. The company uses the straight-line method of depreciation. The following information is available: Investment A Investment B Initial capital investment $60,000 $90,000 Estimated useful life 3 years 3 years Estimated residual value — 0 — — 0 — Estimated annual net cash inflow for 3 years $25,000 $40,000 Required rate of return 10% 12% How long.
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48) Potlatch Company manufactures sonars for fishing boats.  Model 100 sells for $200.  Potlatch produces and sells 5,000 of them per year.  Cost data are as follows: Variable manufacturing $105.00 Per unit Variable marketing $5.00 Per unit Fixed manufacturing $270,000 Per year Fixed marketing & admin $140,000 Per year An offer has come in for a one time sale.
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39) A small business produces a single product and reports the following data: Price $8.00 per unit Variable cost $5.00 per unit Fixed cost $21,000 per month Volume 10,000 per month The company's variable cost goes up by $0.25 per unit.  Fixed costs are lowered from $21,000 to $18,000.   Assume other factors remain the same.  How would this change.
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11) Chambers Company sells glass vases at a wholesale price of $2.50 per unit.  Variable cost is $1.75 per unit.  Chambers' fixed costs are $6,500 per month.  If Chambers wishes to make operating income of $2,500, how many units must be sold? A) 11,500 B) 11,750 C) 12,000 D) 12,500 12) Chambers Company sells glass.
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18) Pueblo Products is a price-taker and uses target pricing.  Pueblo has just done an analysis of their revenues, costs and desired profits, and has calculated its target full cost.  Please refer to the following information: Target full cost $400,000 Per year Actual fixed cost $160,000 Per year Actual variable cost $1.00 Per unit Production volume 250,000 Units.
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11) Which of the following is NOT a fixed cost? A) Property taxes B) Salary of plant manager C) Direct materials cost D) Straight-line depreciation 12) A 15% increase in production volume will result in a: A) 15% increase in the variable cost per unit. B) 15% increase in total mixed costs. C) 15% increase in total manufacturing.
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Learning Objective 19-1 1) Peterson Company has both fixed and variable costs.  If the volume doubles, the total fixed costs will double. 2) Total variable costs change in response to changes in the volume of production. 3) The mixed cost per unit is constant throughout the relevant range of activity. 4) Fixed costs.
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31) Seven Seas Company manufactures 100 luxury yachts per month.  Included in each yacht is a compact media center.  Seven Seas manufactures the media center in-house, but is considering the possibility of outsourcing that function.  At present, the variable cost per unit is $275, and the fixed costs are $39,000.
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38) If a company is a price-taker, which of the following is probably TRUE? A) The company is in a highly competitive market. B) The company's product is unique. C) The company has considerable flexibility in setting prices of its products. D) The company clearly differentiates its product from the competitors. 39) Grove Company makes.
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15) Carte Blanco Company is evaluating an investment of $1,000,000 which will yield cash flows of $257,000 per year for 5 years with no residual value. Present Value of an Annuity of $1 5% 6% 7% 8% 9% 10% 1 0.952 0.943 0.935 0.926 0.917 0.909 2 1.859 1.833 1.808 1.783 1.759 1.736 3 2.723 2.673 2.624 2.577 2.531 2.487 4 3.546 3.465 3.387 3.312 3.240 3.170 5 4.329 4.212 4.100 3.993 3.890 3.791 If Carte Blanco has a hurdle rate of 10%, they should accept the investment because its internal rate of.
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5) Centurion Company is considering a mineral extraction project which requires an initial investment of $2,000,000 and will yield annual cash flows of $300,000 for 8 years.  Centurion has an 8% hurdle rate.  If Centurion uses the NPV method of evaluation investments, this would be considered a good investment opportunity. Present.
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