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Study Resources (Accounting)

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 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 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 21  1 101.As fixed costs increase, the break-even point in units will: a. Increase b. Decrease c. Remain the same d. Unable to determine without variable cost information 102.A company's break-even point would change if there were an increase in: a. Sales volume b. Total fixed costs due to a plant addition c. Total production volume d. Total variable costs due to.
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Accounting:  Concepts & Applications, 11e Chapter 21  1 111.Everclean Company cleans draperies. It charges $90 to clean a full-size drape, and its variable and fixed costs are $55 per drape and $10,000 per year, respectively. Given these data, if Everclean's fixed costs increased to $15,000, how many drapes must the firm.
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Accounting:  Concepts & Applications, 11e Chapter 21  1 41.If total costs are $27,000 and $36,000 for activity levels of 5,000 and 8,000, respectively, how much are fixed costs? a. $12,000 b. $8,000 c. $6,000 d. $0 42.What is the total costs for a company with per-unit variable costs of $12 and total fixed costs of $51,000 if it sells 8,000.
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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 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 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 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 21  1 11.Which of the following types of costs remain constant per unit within a certain relevant range? a. Opportunity costs b. Sunk costs c. Fixed costs d. Variable costs 12.The two components of a mixed cost are: a. Relevant costs and fixed costs b. Variable costs and opportunity costs c. Variable costs and relevant costs d. Variable costs and fixed costs 13.Relevant.
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Accounting:  Concepts & Applications, 11e Chapter 21  1 61.Cash2U Company had the following income statement: Sales revenue (1,000 units) $400,000 Variable costs  220,000 Contribution margin $180,000 Fixed costs  126,000       Net income $ 54,000 Given this data, Cash2U Company's contribution margin percentage is: a. 40% b. 45% c. 50% d. 55% 62.The limiting assumptions of C-V-P analysis include all of the following, EXCEPT: a. The behavior of revenues and cost are linear throughout the.
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Accounting:  Concepts & Applications, 11e Chapter 22  1 MULTIPLE CHOICE 1.Future costs that change as a result of a decision are a. Sunk costs b. Variable costs c. Differential costs d. Opportunity costs 2.Costs that have already been incurred and CANNOT be avoided are a. Sunk costs b. Variable costs c. Differential costs d. Opportunity costs 3.Costs that are never relevant to a decision because they are always the same.
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Accounting:  Concepts & Applications, 11e Chapter 21  1 91.As activity level increases within the relevant range, per-unit fixed costs usually will: a. Increase b. Decrease c. Remain the same d. Vary randomly 92.As activity level increases within the relevant range, total variable costs usually will: a. Increase b. Decrease c. Remain the same d. Vary randomly 93.When all other factors remain constant, which of the following is true? a. An increase.
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Accounting:  Concepts & Applications, 11e Chapter 20  1 9.Franklin Company manufactures picture frames. The following information is available for 2011. Sales volume (in units) 150,000 Production volume (in units) 200,000 Total fixed selling and administrative expenses $200,000 Variable selling expenses per unit $1.50 Total fixed production costs $650,000 Variable production cost per unit $6.20 Beginning inventory $0 Sales price per unit $15 Create an income statement for Franklin.
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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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Accounting:  Concepts & Applications, 11e Chapter 21  1 71.If variable costs are $46 per unit, revenues are $76 per unit, and fixed costs are $7,500, the break-even point is: a. 1,000 units b. 500 units c. 250 units d. 100 units 72.To reach a target income of $20,000, a firm with fixed costs of $10,000 and a per-unit contribution margin.
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Accounting:  Concepts & Applications, 11e Chapter 21  1 3.The following information has been compiled by the accounting department at Wallace Enterprises. The manager, Thomas Hicks, wants you to calculate the variable cost rate and total fixed costs from the information given. Mr. Hicks wants you to use the high-low method of.
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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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Accounting:  Concepts & Applications, 11e Chapter 21  1 7.Winslow Company sold 10,000 swing sets this past year at $280 each. The company incurred expenses of $560,000 for rent, administrative salaries, and insurance for the building. The cost per unit for Winslow was $168. The CEO, Ms. Dunlop, wants to know what.
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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 21  1 Chapter 21—Cost Behavior and Decisions using C-V-P Analysis MULTIPLE CHOICE 1.Which of the following items is NOT a key factor involved in cost-volume-profit (C-V-P) analysis? a. Time value of money b. Fixed and variable costs c. Sales revenue d. The mix of products sold 2.C-V-P analysis is useful to managers in: a. Planning b. Controlling decisions c. Evaluating decisions d. All 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 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 21  1 21.Which of the following costs would LEAST likely be a variable cost? a. Indirect materials b. Direct labor c. Sales commissions d. Plant manager's salary 22.Costs that would NOT be graphed as a straight line are: a. Variable costs b. Total costs c. Fixed costs d. Stepped costs 23.Zodiac Company's total costs are increasing in direct proportion to the increases in.
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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 21  1 81.Inner Corporation sells space heaters. The contribution margin is $5.40 per heater. If fixed costs are $540,000, what would be the total number of heaters sold at the break-even point? a. 100,000 b. 150,000 c. 200,000 d. 250,000 82.Duke Corporation sells fans for $20 per unit. In 2011, fixed costs are expected.
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Accounting:  Concepts & Applications, 11e Chapter 21  1 5.During the past year, United Memories sold 150,000 units. Each of these units was sold at a price of $75. At the end of the year, the accounting department identified the costs per unit to be: $20 in materials, $15 for selling costs,.
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Accounting:  Concepts & Applications, 11e Chapter 21  1 11.Slaby Motors sells two different products. Following are the monthly revenues and costs: Sales Revenue Variable Costs Product A $40,000 $12,000 Product B $70,000 $42,000 Determine the total contribution margin ratio at the current sales mix and the total contribution margin ratio if the sales mix changes to 50% for each product..
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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 21  1 9.Identify the indicated lines, areas, and point on the following graph. 10.Given the following information, draw a profit graph for Viajem Company. Fixed costs: $50,000 Variable costs per unit: $100 Sales revenue per unit: $150 .
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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 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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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 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 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 21  1 PROBLEM 1.The following information is given for Kooskia Company Units Produced Total Fixed Costs Variable Costs per Unit 0-500 $20,000 $40 501-1,000 $27,000 $40 1,001-1,500 $34,000 $50 1,501-2,000 $41,000 $50 Compute the following items for Kooskia Company. a. What is the fixed cost per unit when 400 units are produced? b. What is the total variable cost when 300 units are produced? c. What is the.
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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 21  1 121.Refer to the above graph. On the cost-volume-profit graph, the area between point G, the origin of the graph, and the point at which Line B crosses the sales axis represents the: a. Profit area b. Total costs c. Loss area d. Fixed costs 122.Refer to the above graph. Area A on the profit.
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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 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 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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Accounting:  Concepts & Applications, 11e Chapter 21  1 131.Total contribution margin will increase in a two-product firm if total units sold remain the same and: a. Fewer products with the highest contribution margin are sold b. More products with the highest contribution margin are sold c. More products with the lowest contribution margin are sold d. Fixed costs decrease 132.McCammon.
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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 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 21  1 31.The slope of the line in a scattergraph represents the: a. Variable cost per unit b. Fixed cost per unit c. Mixed cost per unit d. Opportunity cost per unit 32.Which of the following is a common method of analyzing mixed costs? a. High-Low b. Scattergraph c. Both high-low and scattergraph d. Neither high-low nor scattergraph 33.The scattergraph method is used.
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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 21  1 51.If the fixed costs relative to a specific product increase while the variable costs and sales price remain constant, the contribution margin will: a. Increase b. Decrease c. Remain unchanged d. The answer cannot be determined from the information given 52.If a company has a positive contribution margin, the maximum amount of.
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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 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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