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113. Why is the book value of equipment irrelevant when considering the replacement of equipment? 114. “Variable costs are relevant and fixed costs are irrelevant.” Explain why you agree or disagree with this statement. 115. What two criteria must be met for information to be considered relevant to decision making? 116. Why is the residual value of.
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97. You are given the following present value factors at 8 percent, the Rogers Company's minimum desired rate of return: End of Period Present Value of $1 Present Value of an Annuity of $1 1 .926 .926 2 .857 1.783 3 .794 2.577 4 .735 3.312 5 .681 3.993 6 .630 4.623 The Rogers Company is considering the replacement of a piece of equipment. The old machine has a carrying.
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11. The proposals that either meet company strategic goals or produce the minimum rate of return set by management will receive serious review in the preliminary screen process.  12. Availability of funds is not a criterion for deciding on capital investment proposals.  13. The proposals with the highest ranking are funded first in capital investment.
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31. The accounting rate of return is calculated by dividing the project's investment by its net income.  32. The payback period is based on a net present value of cash flows.  33. The accounting rate-of-return method is widely used to measure the estimated performance of a capital investment, primarily because it uses time value of.
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101. Management of Moore City Trust is in the process of evaluating the purchase of a new check sorting machine. The model under review will cost $44,000 and will require installation costs of $5,000. Similar machines have a ten-year life, and management has estimated that this sorter will have a residual.
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77. An example of a pricing objective is to A. have prices that top the market.B. maintain or gain market share.C. maximize losses.D. minimize quality and cost. 78. An example of a pricing objective is to A. ignore long-term pricing strategies in favor of short-term profits.B. increase market share irrespective of the cost of a product.C. maintain a price that is always.
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51. When using traditional, cost-based pricing, the pricing decision is made after products have been put into production.  52. Committed costs are engineered into a product or service at the design stage of product development.  53. Target costing gives managers the ability to control or dictate the costs of a new product at the planning.
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1. Reducing the costs of quality and increasing overall product quality can be achieved simultaneously.  2. Return on quality (ROQ) results when marginal revenues made possible by a higher quality product exceed the marginal costs of providing the higher quality.  3. A drawback of Six Sigma quality is diminishing worker moral.  4. Managers must not base quality.
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141. Lightfoot, Inc., is an international shoe company that specializes in retailing medium-priced goods. Retail outlets are located throughout the world. Management wishes to create an image of giving the customer the most quality for the money spent. Selling prices are developed to attract customers away from competitors. End-of-the-month sales are.
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1. The long-term objectives of a company need not include statements concerning pricing policy.  2. A company that produces standard items for a competitive market should not have the same pricing strategies as a company that makes unique items custom-designed for its customers.  3. A company producing standardized products for its customers can be more.
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127. Development of a transfer price involves A. the use of the highest external market price so that the transferring division is very profitable.B. determination of an appropriate profit markup.C. computation of the selling and delivery costs of the item being transferred.D. the use of a team of lawyers representing the outside interests of the company. 128. Development.
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87. To stay in business, a company must have a selling price that is A. acceptable to the customer.B. able to recover the variable costs of production.C. the highest in the marketplace.D. equal to or lower than the company's costs per unit. 88. Fixed costs that change for activity outside the relevant range would include A. depreciation.B. electricity costs.C. production supplies costs.D. raw.
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21. It is realistic to assume that a total revenue line will be straight rather than curved.  22. A company should not deviate from the traditional approaches to price determination.  23. A good starting point for any pricing method is to develop a price based on the cost of producing the good or service.  24. Economic theory.
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41. An ERP system is a low-cost alternative to an SaaS system.  42. A disadvantage of SaaS is low data security due to multiple company data co-existing on a shared web infrastructure.  43. Managers can use MIS to monitor the changing buying habits of their customers.  44. Using MIS data to develop forecasts and budgets falls under.
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93. The supervisor of a facility has $500,000 to spend on new equipment to improve operations. How should the company proceed if the company’s minimum rate of return is 14 percent and it is considering the following proposals? Proposal Rate of Return Capital Investment P 10% $  300,000 Q 18% 450,000 R 16% 50,000 S 12% 400,000 T 14%      400,000 Total $1,600,000 94. Regis Company has a tax rate of 25.
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47. Which of the following has the goal of having customers perceive the company’s products and services as perfect? A. Total quality managementB. KaizenC. Six SigmaD. All of these options 48. Two respected techniques made popular by Six Sigma are A. TQM and ROQ.B. TQM and kaizen.C. kaizen and benchmarking.D. benchmarking and process mapping. 49. A benchmark is a measurement of the gap between the.
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1. Cost-benefit is an accounting convention or rule of thumb that supports long-run decision making.  2. Capital investment analysis is a decision process for the purchase of capital facilities, such as buildings and equipment.  3. Capital investment analysis involves the evaluation of alternative proposals for large capital investments, including considerations for financing the projects.  4. Qualitative factors.
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31. Return on assets pricing has the same objective as gross margin pricing for the price determination process.  32. Because a business should have as its primary objective the earning of a minimum rate of return on assets, the return on assets pricing method has a great deal of appeal and support.  33. For the.
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48. While making capital investment decisions, companies set a minimum rate of return to  A. set the maximum expected returns.B. guard their profitability.C. cover their fixed costs.D. comply with the government regulations. 49. Capital investment analysis involves all of the following except A. preparing formal requests for capital investments.B. analyzing the sales mix.C. selecting the best alternative.D. dividing available capital investment funds. 50. Which.
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67. Scrap and rework are examples of A. prevention costs.B. appraisal costs.C. internal failure costs. D. external failure costs. 68. Warranty claims and adjustments are examples of  A. prevention costs.B. appraisal costs.C. internal failure costs. D. external failure costs. 69. Quality training of employees is an example of A. a prevention cost.B. an appraisal cost.C. an internal failure costs. D. an external failure cost. 70. Phelps Company manufactures custom-designed filtering equipment.
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78. Rodriguez Inc. is considering a project that costs $200,000. The company expects the annual cash revenues to be $75,000 and annual expenses (including depreciation) to be $30,000. The project has a ten-year useful life and a residual value of $25,000. Assume Rodriguez Inc. uses the straight-line method of depreciation. Using.
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77. Based on the graph, which company is the least serious about TQM? A. A Co.B. B Co.C. C Co.D. Insufficient data to determine answer. 78. Based on the following data, which department is most committed to TQM? Dept. X Dept. Y Dept. Z Total costs of quality as a percentage of sales 4.50% 4.50% 4.50% Ratio of costs of conformance to total costs of quality 0.70.
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11. The Six Sigma quality standard was used by Motorola to improve its performance.  12. Many traditional cost-based information systems do not provide the value-based information needed in today's business environment.  13. Managers' concerns about the quality of a product or service include customer expectations and perceptions.  14. In 1987, the U.S. Congress created the Deming Prize.
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71. Identifying the minimum price the company can sustain falls under the evaluating stage of the management process.  72. Setting internal transfer prices for products or services falls under the planning stage of the management process.  73. A manager may deviate from the four pricing rules if a specific short-term objective is being targeted.  74. Breaking any.
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117. Market research shows potential customers will buy a particular product at a selling price of $1,590. If the desired profit is 30 percent of target cost, the company should make the product if the cost does not exceed A. $477.B. $1,113.C. $1,223.D. $1,253. 118. Market research shows potential customers will buy a particular product at a selling.
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41. Return on assets pricing is based on the estimated number of units to be sold.  42. Gross margin is the difference between sales and the total production costs of those sales.  43. The numerator in the markup percentage for the gross margin–based pricing method comprises selling expenses, general and administrative expenses, and a desired.
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57. Which of the following ISO standards address minimizing the harmful environmental effects of business and continually improving environmental performance? A. ISO 9000B. ISO 14000C. ISO 26000D. ISO 31000 58. The ISO 9000 series guidelines A. standardize quality management and quality assurance.B. are adopted worldwide. C. follow eight quality management principles.D. do/are all of these. 59. Which of these is not a category considered.
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61. A negotiated transfer price is often used for internal pricing.  62. One approach to the development of a transfer price is to use the market value if the item has an existing market at the time of transfer.  63. The cost-plus transfer price is the sum of the costs incurred by the producing division.
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119. What qualitative factors should managers consider before making a special order decision? 120. Relative to making a segment profitability (keep-or-drop) decision, explain which costs are avoidable costs and which costs are unavoidable. 121. What are the two steps in the analysis of a sales mix decision? 122. Are joint costs relevant to a sell-or-process-further decision? Explain.
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41. To analyze a capital investment using the accounting rate-of-return method, one can use an estimated amount for the annual net income.  42. As part of the performing stage of management, capital investment decisions are implemented with proper controls.  43. As part of the communication stage of management, post completion audits are performed to determine.
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103. Valprado Industries is considering purchasing a machine that will produce plastic kitchenware. The machine would be used for five years, would cost $35,000, and would have a $5,000 residual value. It is expected to increase annual net cash inflows by $8,800. Valprado uses the straight-line method of depreciation. Using the.
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150. Royal Bath, Inc. is considering the production of a new bathroom vent system. The Marketing Department has determined that there would be demand for the product at or below a selling price of $175 per unit. Anticipated unit costs are as follows: Direct materials $28.00 Direct labor costs:     Manufacturing:        Hours 2.2        Hourly rate $12.00    .
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148. Pixie Industries has recently patented a new product called Stardust. The following annual information was developed by the company's controller for use in price determination:     Variable production costs $930,000 Fixed overhead 310,000 Selling expenses 210,000 General and administrative expenses 115,000 Desired profit 171,000      Annual demand for the product is expected to be 500,000 bottles. Round answers to nearest two.
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68. Annual net cash flows are defined as A. annual cash inflows minus annual cash outflows.B. annual cash inflows minus annual cash outflows minus depreciation expense.C. annual revenues plus cash expenses.D. annual cash inflows minus depreciation expense. 69. Which of the following methods uses the time value of money for capital investment analysis? A. Average investmentB. Net present value methodC. Payback methodD. Accounting.
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97. Exhibit 2A Microeconomic Pricing Theory—Total Revenue and Total Cost Curves Based on Exhibit 2A, maximum profits will be realized at unit sales of  A. 1,000.B. 2,250.C. 6,000D. 11,400. 98. Exhibit 2B Microeconomic Pricing Theory—Marginal Revenue and Marginal Costs Curve A in Exhibit 2B represents the A. total revenue curve.B. marginal revenue curve.C. total cost curve.D. marginal cost curve. 99. Exhibit 2B Microeconomic Pricing.
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105. The Logan Company specializes in decorative fruit baskets. Currently, the company is analyzing purchase alternatives for a fruit-polishing machine. Data relevant to the decision are as follows: Machine A Machine B Cost $85,000 $74,000 Useful life 6 years 6 years Residual value $5,000 $4,000 Estimated annual net cash flows $30,000 $28,000 Present value multipliers at 10 percent:      Dollar received at the end of six years .564     .
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58. If alternatives for an equipment replacement decision affect revenues the same and do not involve cash receipts, its benefits could still be measured by analyzing its A. cost savings.B. net cash inflows.C. net cash outflows.D. none of these options. 59. Projected disposal or residual values of replacement equipment are relevant to capital investment analysis because A. they represent future.
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99. Fresno Manufacturing Company specializes in the production of precision tools. Management is in the process of selecting a new drill press. The press under consideration will cost $92,000 plus necessary installation charges of $5,000. Experience indicates that the press will last for five years and should have a residual value.
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95. The following data have been gathered for a capital investment decision. Cash inflows:       Year 1 $50,000 Year 2 60,000 Year 3 40,000 Year 4 50,000 Year 5 40,000 The minimum rate of return for this investment is 14 percent. The present value factors for a 14 percent discount rate are as follows: End of Period Present Value of $1 Present Value of.
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87. What criteria must be met before accepting any capital expenditure proposal with respect to minimum rate of return on investment? 88. Why is the book value of equipment irrelevant when considering the replacement of equipment? 89. Why is the residual value of equipment relevant when considering the replacement of equipment? 90. Describe the net present value.
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31. The sale and shipment of a product marks the end of performance measurement.  32. Total quality management seeks continuous improvement on product quality and analyzes performance using only nonfinancial measures.  33. The two components of costs of quality are costs of conformance and costs of nonconformance.  34. Low costs of conformance usually result in high costs.
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11. Setting appropriate prices is one of the simplest decisions that managers make on a day-to-day basis.  12. Organizations will not invest in making a product or providing a service unless it will provide a minimum return.  13. Factors that influence the pricing decision are only external in nature.  14. Both internal and external factors can influence.
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21. The ISO promotes standardization with a view of facilitating the international exchange of goods and services.  22. To become ISO certified, an organization must pass a rigorous third-party audit of its manufacturing and service processes.  23. As a result of the ISO-certification process, ISO-certified companies have detailed documentation of their operations.  24. Malcolm Baldrige National Quality.
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