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Study Resources (Accounting)

Accounting:  Concepts & Applications, 11e Chapter 24  1 7.Gremi Company provides landscaping services to private home owners. Recently Gremi has decided to develop a balanced scorecard. Gremi has developed the following goals and objectives: 1. Goal: To provide excellent customer service ? Finish the customer’s landscapes within specified estimate ? Meet the customer’s landscape needs ?.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 8.Kankakee Company wants to buy a machine that will cost $770,124 and provide an annual cash income of $120,000 for 10 years. What is the company's internal rate of return? Assume the following present value factors: Percent Present Value of $1 for 10 years Present Value.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 81.In general, which of the following is true of the impact of income taxes on the internal rate of return? a. Income taxes increase the internal rate of return b. A lower tax rate causes a greater reduction in the internal rate of return c. A higher tax rate.
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2-11:Breakeven and Cost-Volume-Profit with Taxes DisKing Company is a retailer for video disks.  The projected after-tax net income for the current year is $120,000 based on a sales volume of 200,000 video disks.  DisKing has been selling the disks at $16 each.  The variable costs consist of the $10 unit purchase.
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Accounting:  Concepts & Applications, 11e Chapter 24  1 71.Which of the following processes is NOT effective in supporting customer satisfaction? a. Learning and growth measures b. Innovation process measures c. Service-after-sale process measures d. Operations process measures 72.An operation process that has six sigma quality: a. Has very high quality b. Has the lowest possible cost c. Is very competitive d. Is completed on schedule nearly every time 73.Which.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 PROBLEM 1.List and describe the three aspects of capital investment decisions that are critical to long-run profitability. 2.You are considering the purchase of a car to use for pizza delivery. The owner of the car will let you pay for it in 4 monthly payments.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 51.Which of the following should be considered in a decision to enter a market? a. Effects on profits b. Effects on quality c. Effects on delivery time d. All of these are correct 52.When a segment of a business consistently shows net losses, it should: a. Definitely be dropped b. Be dropped only if its contribution.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 4.Green Acre Farms wants to buy a machine that costs $750,000 and will increase net income an average of $200,000 per year. What is the rate of return without considering the time value of money? 5.Carroll Corporation is considering the purchase of a new.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 11.Which of the following capital budgeting methods ignores the time value of money? a. Internal rate of return method b. Net present value method c. Payback method d. All of these consider the time value of money 12.The formula for computing the payback period is: a. Investment cost divided by annual revenues from investment b. Investment.
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2-1:Fixed, Variable, and Average Costs Midstate University is trying to decide whether to allow 100 more students into the university.  Tuition is $5000 per year.  The controller has determined the following schedule of costs to educate students: Number of StudentsTotal Costs               4000              $30,000,000               4100              30,300,000               4200              30,600,000               4300              30,900,000 The current enrollment is.
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Accounting:  Concepts & Applications, 11e Chapter 24  1 PROBLEM 1.List and describe the three major differences between residual income and economic value added. 2.Mohave Company has decided to start calculating economic value added. Mohave’s accountant gathered the following information: Operating income $1,705,000 Total assets $7,564,000 Current liabilities $111,600 Stockholders’ equity $2,882,000 Tax rate 35% Weighted average cost of capital 12% Using this information, calculate Yavapai’s.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 21.Which type of data might cause a manager to erroneously reject an order? a. Total cost b. Effect on sales c. Future costs that would change d. Differential costs 22.In making a decision about whether or not to fill a special order, fixed costs that are incurred regardless of whether the order.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 10.List 10 qualitative factors that could be taken into account when making capital budgeting decisions. 11.Macoupin Company purchased an asset for $275,000. It is expected to provide an additional $66,000 of annual net cash inflows. The asset has a 10-year life and an expected.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 6.Parkways Inc. is considering the purchase of a new machine. The machine will cost $60,000 to purchase and will generate $15,000 of revenues per year for the next 8 years. The machine will cost $1,000 per year to maintain and have a salvage.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 41.A cost important to the decision-making process but NOT recorded in conventional accounting records is called a(n): a. Sunk cost b. Standard cost c. Direct cost d. Opportunity cost JD Smith Company is operating at less than full capacity. The production manager is considering using this excess capacity to make a part.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 14.Speedy Movers is considering the purchase of a new moving truck that will reduce fuel and maintenance costs as well as increase revenues. Data related to the new truck follows: Initial investment $98,000 Useful life 7 years Annual cash savings $26,000 Salvage value at end of useful life $12,000 Cost of capital 14% Income.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 51.Clarke Company purchased equipment for $100,000 that is expected to generate cash inflows from operations of $30,000 in each of the next 5 years. The machine will be depreciated on a straight-line basis with no salvage value. Assume the following present value factors: Period Present.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 MULTIPLE CHOICE 1.All of the following define capital EXCEPT: a. Material wealth b. Money used for investment c. Resources used for future benefit d. Depreciable assets 2.All of the following are characteristics of the capital investment decisions that are critical to long-run profitability EXCEPT a. They affect earnings over a long period b. They are much less.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 PROBLEM 1.You are the controller of Rugged Shoe Company. The company has excess snow boots in its inventory because of a mild winter season. A large retail store chain has offered to buy 10,000 pairs of these boots at a special price. The president.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 61.Stanley Company invested in an asset with a useful life of 4 years and no salvage value. The company's expected rate of return is 12%. The cash inflows and present value factors for 4 years are as follows: Period Cash inflows Present Value of an Annuity of.
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2-5:  Opportunity Cost of Attracting Industry The Itagi Computer Company From Japan is looking to build a factory for making DVD burners in the United States.  The company is concerned about the safety and well-being of its employees and wants to locate in a community with good schools.  The company also.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 31.Tootie Clothing Store is considering opening a new store. The expected purchase price is $270,000, expected annual revenues are $150,000, and expected annual costs are $90,000, including $22,500 of depreciation. The store has a payback period of approximately: a. 1.8 years b. 3.0 years c. 3.3 years d. 4.5 years 32.Tootie Clothing.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 9.Humboldt Company manufactures two types of products: tables and chairs. The company can sell as many units of each product as it can produce, but production is limited by the availability of direct labor hours. The revenues, costs, and labor hours for the.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 61.Merced Corporation is considering adding a new product line. Market research indicates that sales revenue for the new line would be $80,000 for 35,000 units. Variable costs would be $1.70 per unit; direct fixed costs, $0.40 per unit; and indirect fixed costs, $0.50.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 7.Puyallup Corporation makes two products in a joint manufacturing process. At the point of separation, costs of $56,000 have been incurred. Each product can be sold at the separation point or processed further. The following information is available for these products. Product MJ1 Product MJ2 Sales.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 12.Inyo Company is planning to market a new product and must decide on a proper selling price. The following cost information for the manufacture of one unit has been compiled: Direct materials $168 Direct labor 315 Variable manufacturing overhead 217 Variable selling and administrative expenses 140 Fixed manufacturing overhead 140 1. Assuming that Inyo Company.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 11.Amador Company is pricing a new line of recliners. Production costs for each recliner are as follows: Cost per unit Direct materials $150 Direct labor $160 Variable manufacturing overhead $120 Variable selling and administrative expenses $80 Total fixed manufacturing overhead $8,400 Total selling and administrative expenses $3,600 Average number of recliners sold per year 120 1. Assuming that Amador.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 21.Which of the following is a characteristic of the unadjusted rate of return? a. It takes into account annual cash flows b. It provides a measure of GAAP-based profitability c. It takes into account the time value of money d. It determines whether an investment fits into a specific period for.
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Accounting:  Concepts & Applications, 11e Chapter 24  1 41.A technical tool that provides users with the ability to study, control, and improve processes of all types is a a. Balanced scorecard b. Statistical process control c. Cost of quality analysis d. Just-in-time inventory 42.The criticism of traditional management accounting measures is that they focus too much on: a. Intangible corporate capabilities b. Information assets c. Periodic.
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  2-8:  Multiple Product Cost Volume Profit  A company sells three products as shown below: Product X Product Y Product Z Total Units 60,000 140,000 50,000 250,000 Sales $90,000 $150,000 $60,000 $300,000 Variable Costs $63,000 $93,000 $19,000 $175,000 Contribution Margin $125,000 Fixed Costs $100,000 Required: a.  How many units of each product need to be sold to breakeven? b.  How many units must of each product must be sold if the company wants to have a.
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Accounting:  Concepts & Applications, 11e Chapter 24  1 31.Costs incurred to repair products under warranty are: a. Prevention costs b. Appraisal costs c. Internal failure costs d. External failure costs 32.An example of a prevention cost would be: a. Product recalls b. Adjusting test equipment c. Scrap d. Process or product design 33.An example of an appraisal cost would be: a. Product recalls b. Adjusting test equipment c. Scrap d. Process or product design 34.An example of an.
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Accounting:  Concepts & Applications, 11e Chapter 24  1 3.At the end of 2012, Bernal Corporation reported the following information: 2012 2011 Total current assets $29,950 $30,170 Total assets $964,250 $969,570 Total current liabilities $11,600 $13,800 Total liabilities $436,600 $417,300 Common stock     $374,920 $418,000 Retained earnings       $152,730 $134,270 Operating income before taxes $275,300 $259,400 Tax rate 40% 40% Minimum required rate of return 12% 12% Weighted average cost of capital 14.5% 14% Using this information, calculate the following: 1. Bernal’s residual income for 2012 2. Bernal’s economic.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 12.Cottages 4U is considering several long-term investment projects. Management wants to accept the two best projects, given the following data. Project identifier A B C D E Investment cost  50,000  32,000  48,000  40,000  80,000 Present value of cash inflows $46,500 $30,000 $60,000 $48,000 $88,000 1. Calculate the net present value and the profitability index for each project. 2. Which projects are acceptable based on the.
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Accounting:  Concepts & Applications, 11e Chapter 24  1 6.Listed below are scorecard measures for a merchandising company: a. Errors in customer service b. Employee turnover rate c. Percentage of on-time deliveries d. Costs to retain customers e. Lead time from order to delivery f. Return on investment g. Percentage of employees participating in education activities h. Unit product cost i. Number of new customers Classify each scorecard measure according to.
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Accounting:  Concepts & Applications, 11e Chapter 24  1 51.An example of an outcome performance measure is: a. Number of defecting customers b. Percentage of on-time deliveries c. Number of production interruptions d. Delivery cost to the customer 52.An example of a leading performance measure is: a. Number of new customers b. Customer retention rates c. Average response time for a service call d. Company's percent of total number.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 71.To maximize net income in a situation involving scarce resources, a company should: a. Manufacture products that generate overall contribution margin b. Manufacture products that generate the greatest overall contribution margin per unit of scarce resource c. Manufacture products that sell for the highest price d. Manufacture products that have the.
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2-10:Cost, Volume, Profit Analysis Kalifo Company manufactures a line of electric garden tools that are sold in general hardware stores.  The company's controller, Sylvia Harlow, has just received the sales forecast for the coming year for Kalifo's three products:  weeders, hedge clippers, and leaf blowers.  Kalifo has experienced considerable variations in.
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Accounting:  Concepts & Applications, 11e Chapter 24  1 61.An example of an operations process measure is: a. Customer requests handled on first call b. Modifications required per design c. Six sigma quality d. Costs per customer service incident 62.An example of an innovation process measure is: a. Customer requests handled on first call b. Modifications required per design c. Six sigma quality d. Costs per customer service incident 63.An.
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Accounting:  Concepts & Applications, 11e Chapter 24  1 5.Cochise Company manufacturers top of the line camping tents. The customers of Cochise Company expect, and usually receive, high-quality tents. The following chart is an accumulated list of all of the costs that Cochise acquired during the past year that relate to quality. Cost.
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Accounting:  Concepts & Applications, 11e Chapter 24  1 21.Which of the following statements is NOT true under the JIT philosophy? a. Inventory is completed only when ordered by customers b. Raw materials are received when needed for production c. Safety stock is maintained to deal with defective products d. Manufacturing activities must be pulled by need for output 22.A signaling.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 11.Which of the following is true when making product and process decisions? a. Opportunity costs should never be included in making a decision. b. All costs should be taken into account when making a decision. c. Only the differential costs should be used to make a decision. d. None of these.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 41.Which of the following would have the greatest impact on the net present value of an investment? a. The initial cost of the investment is understated by $7,000 b. The net annual cash inflows are understated by $1,400 for 5 years c. The salvage value is understated by $7,000 d. All.
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Accounting:  Concepts & Applications, 11e Chapter 23  1 71.The use of a profitability index is required when ranking projects for capital rationing under which method? a. Internal rate of return method b. Payback method c. Net present value method d. Unadjusted rate of return method 72.When a company has an opportunity to invest in several projects but has limited resources,.
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Accounting:  Concepts & Applications, 11e Chapter 24  1 MULTIPLE CHOICE 1.Which of the following is NOT one of the components of economic value added? a. Net operating profit after taxes b. Average total assets c. Weighted average cost of capital d. Invested capital 2.Which of the following is NOT one of the components of residual income? a. Operating profit b. Average total assets c. Weighted average cost.
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Accounting:  Concepts & Applications, 11e Chapter 24  1 4.Below is a list of activities performed by Gila and Greenlee, a CPA firm.  Indicate whether each activity is a value-added activity or a non-value added activity. a. Preparing tax returns for clients b. Assisting clients with their accounting systems c. Reformatting layout of financial statements d. Updating clients’ fixed.
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  1-1:Accounting and Control The controller of a small private college is complaining about the amount of work she is required to do at the beginning of each month.  The president of the university requires the controller to submit a monthly report by the fifth day of the following month.  The monthly.
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Accounting:  Concepts & Applications, 11e Chapter 24  1 11.Adoption of a just-in-time inventory system: a. Avoids a buildup of parts and inventory b. Provides an accurate allocation of costs c. Replaces direct allocation as the most accurate method of assigning overhead cost d. Is based on a demand push theory 12.The just-in-time inventory system focus is: a. A low cost supplier b. State of.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 5.Plumas Company presently has two products: tapes and CDs. The company is considering discontinuing the tape line. The following financial information is available for these two products: Tapes CDs Sales revenue $825,000 $684,000 Variable costs (570,000) (399,000) Direct fixed costs (180,000) (120,000) Common fixed costs  (120,000)  (90,000) Net income (loss) $(45,000) $ 75,000 Should Plumas Company discontinue the tape.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 31.Lumens Corporation makes ornamental lamps, the costs per lamp are the following: Direct materials $35 Direct labor 45 Manufacturing overhead 50 Total $140 The manufacturing overhead can be divided into 40% variable manufacturing overhead and 60% fixed manufacturing overhead. To earn a reasonable return and cover administrative and selling expenses, Lumens.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 3.Silverado Company needs 3,000 special cinches for a saddle that it designs and manufactures. If the company buys the cinches from another company, it will have idle capacity in its plant that cannot otherwise be used. The company factory space is sufficient to.
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