1.

Fixed costs are $60,000 and variable costs are 40% of sales. Breakeven sales equals N/A


150000


100000


50000


80000




2.

You sell a product at $20 per unit with variable costs of $5 per unit and total fixed costs of $30,000. The aftertax profit is $120,000 and the tax rate is 40%. How many units must be sold to earn the aftertax profit? N/A




3.

At the breakeven point, the contribution margin equals total N/A


Variable costs.


Sales revenues.


Selling and administrative costs.


Fixed costs.




4.

Costvolume profit relationships that are curvilinear may be analyzed linearly by considering only N/A


Fixed and semivariable costs.


Relevant fixed costs.


Relevant variable costs.


A relevant range of volume.




5.

When an organization is operating above the breakeven point, the degree of amount that sales may decline before it suffers losses is the N/A


Operating leverage.


Margin of safety.


Yield.


Accounting rate of return.




6.

The breakeven point in units decreases when unit variable costs N/A


Increase and sales price remains.


Remain unchanged and sales price decreases.


Decrease and sales price remains unchanged.


Decrease and sales price decreases.




7.

Costvolumeprofit analysis assumes over the relevant range that N/A


Total costs are linear.


Fixed costs are nonlinear.


Variable costs are nonlinear.


Selling prices are nonlinear.




8.

Costvolumeprofit analysis assumes that over the relevant range N/A


Variable costs are nonlinear.


Fixed costs are nonlinear.


Selling prices are unchanged.


Total costs are unchanged.




9.

The relevance of a particular cost to a decision is determined by the N/A


Potential effect on the decision.


Size of the cost.


Riskiness of the decision.


Accuracy and verifiability of the cost.




10.

To find the cash breakeven point, the charges to be subtracted from total fixed costs are: N/A


Depreciation expenses


Capital gain


Target income


Margin of safety




11.

In a multiproduct or service business, to compute the breakeven for an individual product or service, it is not necessary to compute: N/A


Weighted average contribution margin


Sale mix ratio


Contribution margin ratio


Fixed cost allocated to each product or service




12.

The present value of an annuity of $1 table is used to determine a future value. T F N/A




13.

Which table has the highest factor? N/A


Present value of $1


Future value of $1


Present value of an annuity of $1


Future value of an annuity of $1




14.

You take out a mortgage today and will make equal monthly payments over 10 years at a specified interest rate. Which table would be used to solve this problem? N/A


Present value of $1


Future value of $1


Present value of an annuity of $1


Future value of an annuity of $1




15.

The present value of a $1 table is used to determine a future value. T F N/A




16.

The rate of return earned on a proposal such that the present value of cash inflows equals the present value of cash outflows is derived from the profitability index. T F N/A




17.

A graphic description of the sequence of possible outcomes is referred to as: N/A


Simulation


Decision tree


Sensitivity analysis


Capital budgeting




18.

An initial investment of $20,000 generates annual cash inflows of $8,000. The payback period is: N/A




19.

The rate of return earned on a proposal such that the present value of cash inflows equals the present value of cash outflows is derived from the internal rate of return method. T F N/A




20.

The capital budget is a (n) N/A


Plan to insure that there are sufficient funds available for the operating needs of the company.


Exercise that sets the longrange goals of the company including the consideration of the company including the consideration of external influences.


Plan that coordinates and communicates a company's plan for the coming year to all departments and divisions.


Plan for the best selection and financing of longterm investment proposals.




21.

Capital budgeting techniques are least likely to be used in evaluating the N/A


Acquisition of new aircraft by a cargo company.


Design and implementation of a major advertising program.


Adoption of a new method of allocating nontraceable costs to product lines.


Sale by a conglomerate of an unprofitable division.




22.

The capital budgeting model that is ordinarily considered the best model for longrange decision making is the N/A


Payback model


Accounting rate of return model.


Unadjusted rate of return model.


Net present value model.




23.

The internal rate of return (IRR) is the N/A


Hurdle rate.


Rate of interest for which the net present value is greater than 1.0.


Rate of interest for which the net present value is equal to zero.


Accounting rate of return.




24.

The ratio of cash plus marketable securities plus accounts receivable divided by current liabilities is called: N/A


Current ratio


Quick ratio


Working capital ratio


Cash flow ratio




25.

The earnings per share is computed for: N/A


Common stock


Nonredeemable preferred


Redeemable preferred


Common stock and fully diluted preferred stock




26.

An increase in the current ratio while the quick ratio remains constant means a buildup in: N/A


Cash


Longterm debt


Current liabilities


Inventory




27.

Using financial leverage is a good financial strategy from the viewpoint of stockholders of companies having: N/A


A high debt ratio


Cyclical highs and lows


Steady or rising profits


A steadily declining current ratio




28.

The price/earnings ratio: N/A


Measures the past earning ability of the firm


Is a gauge of future earning power as seen by investors


Relates price to dividends


Relates price to total net income




29.

What type of ratio is earnings per share? N/A


Profitability ratio.


Activity ratio.


Liquidity ratio.


Leverage ratio.




30.

A measure of longterm debtpaying ability is a companyâ€™s N/A


Length of the operating cycle.


Return on assets.


Inventory turnover.


Times interest earned.




31.

Which of the following measures the time needed to turn cash into inventory, inventory into receivables, and receivables back into cash? N/A


Accounting cycle


Quick ratio


Payout ratio


Return on equity




32.

An increasing trend in audit fees may indicate a problem with: N/A


Internal control


Accounting estimates


Book income vs. Taxable income


Discretionary costs




33.

Quality of earnings is improved when a company has a high degree of estimated expenses. T F N/A




34.

Determine the material quantity variance using actual production of 100 units of output, 3 pieces allowed per unit, actual price of $2 per piece, and standard price of $3 per piece. Assume the company used 240 pieces of material. N/A




35.

Return on investment is one method under which center concept? N/A


Revenue center


Investment center


Cost center


Profit center




36.

Which one of the following budgeting methodologies would be most appropriate for a firm facing a significant level of uncertainty in unit sales volumes for next year? N/A


Topdown budgeting.


Lifecycle budgeting.


Static budgeting.


Flexible budgeting.




37.

Which of the following is a purpose of standard costing? N/A


Determine breakeven production level.


Control costs.


Eliminate the need for subjective decisions by management.


Allocate cost with more accuracy.




38.

An efficiency variance equals N/A


A flexible budget amount minus a static budget amount.


Actual operating income minus flexible budget operating income.


Actual unit price minus budgeted unit price, times the actual units produced.


Budgeted unit price times the difference between actual inputs and budgeted inputs for the actual activity level achieved.




39.

Which of the following factors should not be considered when deciding whether to investigate a variance? N/A


Magnitude of the variance and the cost of investigation.


Trend of the variances over time.


Likelihood that an investigation will eliminate future occurrences of the variance.


Whether the variance is favorable or unfavorable.




40.

Which department is customarily held responsible for an unfavorable materials usage variance? N/A


Quality control.


Purchasing.


Engineering.


Assembly.




41.

The least complex segment or area of responsibility for which costs are allocated is a(n) N/A


Profit center.


Investment center.


Contribution center.


Cost center.




42.

Responsibility accounting defines an operating center that is responsible for revenue and costs as a(n) N/A


Profit center.


Revenue center.


Division.


Operating unit.




43.

Which one of the following organizational segments is held responsible for the revenues earned and costs incurred in that center? N/A


Revenue center.


Profit center.


Cost center.


Investment center.




44.

The sales price variance equals: N/A


(Actual selling price vs. Budgeted selling price) x budgeted units sold


Actual selling price x budgeted units sold


(actual selling price vs. Budgeted selling price) x actual units sold


Actual selling price vs. Budgeted selling price




45.

The sales volume variance equals: (actual quantity vs. budgeted quantity) x actual selling price. T F N/A




46.

The sales mix variance equals: (actual quantity vs. budgeted quantity) x actual selling price. T F N/A




47.

The sales quantity variance equals N/A


Actual units x (budgeted weightedaverage CM for planned mix  budgeted weightedaverage CM for actual mix).


(Actual sales at budget mix  budget sales at budget mix) x budget CM (or gross profit / unit).


(Actual market share percentage  budgeted market share percentage) x actual market size in units x budgeted weightedaverage CM.


(Actual price Ã» standard price) x actual units




48.

The cost volume variance equals N/A


(Actual sales budget sales) x budget cost per unit.


(Actual units  master budget units) x budgeted weightedaverage UCM for the planned mix.


Budgeted market share percentage x (actual market size in units  budgeted market size in units) x budgeted weightedaverage UCM.


(Actual market share percentage  budgeted market share percentage) x actual market size in units x budgeted weightedaverage UCM.




49.

A company's net income is $1,500,000, total assets are $5,000,000, sales are $4,000,000, and the minimum rate of return is 10%. Residual income equals: N/A


3500000


1000000


0.8


1100000




50.

Residual income is a better measure for performance evaluation of an investment center manager than return on investment because N/A


The Problems associated with measuring the asset base are eliminated.


Desirable investment decisions will not be neglected by highreturn divisions.


Only the gross book value of assets needs to be calculated.


The arguments about the implicit cost of interest are eliminated.




51.

________________ is not an action management can take to enhance rate of return on investment (ROI): N/A


Improve margin by reducing expenses, raising selling prices, or increasing sales faster than expenses


Improve turnover by increasing sales while holding the investÂ¼ment in assets relatively constant, or by reducing assets


Improve both


Enhance the cost of capital.




52.

Improving Economic Value Added (EVA) can be achieved by N/A


Invest capital in highperforming projects


Use more capital


Increase profit using more capital


Increase the cost of capital




53.

The Du Pont formula combines the income statement and balance sheet into a static measure of performance. T F N/A




54.

Residual income (RI) differs from ROI because N/A


RI is a measure over time, while ROI represents the results for one period.


The imputed interest rate used in calculating RI is more easily derived than the target rate that is compared to the calculated ROI.


RI focuses on maximizing absolute dollars of income rather than a specific rate of return.


Average investment is employed with RI while yearend investment is employed with ROI.




55.

If usage per month is 100 units, economic order quantity is 20, cost per order is $35, and carrying cost per unit is $12, the total order cost is: N/A




56.

The added profitability generated from giving credit to marginal customers is the: N/A


Contribution margin


Gross margin


Opportunity cost


Sales obtained




57.

"Mail float" is how long it takes for a check to go from payor to receiver. T F N/A




58.

A stock that does not have a track record of high earnings and dividends is referred to as: N/A


Income


Growth


Speculative


Defensive




59.

Stock selection based on studying trends in charts of volume and price of a security is referred to as: N/A


Fundamental analysis


Breadth index


Moving average


Technical analysis




60.

A put option is an option to buy a security at a stipulated price during a stated time period. T F N/A




61.

The return on investment typically comes from two sources: __________ and capital gains (losses). N/A


Liquidity


Selling price


Purchase price


Current income




62.

As a measure of relative risk, we use the N/A


Coefficient of variation


Holding period of return


Standard deviation


Geometric return




63.

Assume that the risk free rate (rf) is 8% and the expected return for the market (rm) is 12%. If beta is 2.0, the required rate of return on a security is N/A




64.

A call option is an option to buy a security at a stipulated price during a stated time period. T F N/A




65.

Standard deviation divided by average net income is called: N/A


Beta


Instability index of earnings


Elastic demand


Coefficient of variation




66.

Factors that an investor considers in evaluating a firms stock include all except: N/A


Financial health


Industry factors


Number of future investors


Future outlook of the company




67.

Primary assumptions underlying technical analysis do not include N/A


Market action discounts everything.


History repeats itself.


Future is selfevident.


Supply and demand determine market price.




68.

Which of the following is not a tool for technical analysis? N/A


Market breadth


Financial statement analysis


Relative strength analysis


Moving averages




69.

When you buy less than 100 shares of a company you have purchased N/A


An odd lot.


A round lot.


Both an odd lot and a round lot.


A combined lot




70.

In investment terminology, selling stock that you have borrowed is known as a N/A


Margin sale


Short sale


Limit sale


Stoploss sale




71.

One of the best sources of financial market and individual security price data that appears on a weekly basis is N/A


Barron's


Forbes


U.S. News & World Report


Wall Street Journal




72.

The most widely followed stock average is the N/A


Dow Jones Industrial Average


Standard & Poor's Index


American Stock Exchange Index.


Wall Street Journal Index.




73.

_______ is a portfolio characteristic which leads to reduced risk with good return. N/A


Maturity


Priceearnings ratio


Diversification


Duration




74.

Portfolio management involves making decisions in order to N/A


Buy low and sell high


Maximize risk and return


Accept risk


Meet your investment needs and objectives




75.

Buying _______ would not be an investment. N/A


Common stock


An automobile


Real estate


Gold




76.

________________ is not a key indicator of market and stock performance. N/A


Trading volume


Return on equity


Market breadth


Barron's Confidence Index




77.

The opportunity cost associated with failing to pay a supplier on terms of 2/10, net/30 is: N/A




78.

Unsecured shortterm notes issued by the highest quality companies is called: N/A


Finance company loan


Commercial paper


Warrant


Bond




79.

A continuing agreement for loans up to a specified amount is referred to as line of credit. T F N/A




80.

A merger of two companies in unrelated industries is what type of combination? N/A


Vertical


Level


Conglomerate


Horizontal




81.

A holding company's only purpose is to buy the securities of other companies. T F N/A




82.

Exponential smoothing uses averages that are updated as new information is received. T F N/A




83.

Which of the following methods involves an extensive use of monthly historical data for estimating budget activities? N/A


Time series analysis


Market research


Linear programming


The Delphi technique




84.

Classical decomposition of time series do not deal with N/A


Seasonal


Exponential


Cyclical


Trend




85.

The use of multiple independent variables usually increases the proportion of the variation in the dependent variable explained by the cost prediction equation. T F N/A




86.

Mount Company incurred a total cost of $8,600 to produce 40 units of pulp. Each unit of pulp required 5 direct labor hours to complete. What is the total fixed costs if the variable cost was $15 per direct laborhour? N/A




87.

The letter y in the standard regression equation of y = a + bx is best described as the N/A


Dependent variable


Independent variable


Variable cost coefficient


Constant coefficient




88.

Sales forecasts are usually more reliable, especially if fluctuations in certain economic indicators precede fluctuations in the company sales, if certain relationships exist. One measurement tool used to examine the relationship between sales and economic indicators is known as N/A


Correlation.


Cycle projection.


Trends analysis.


Regression.




89.

In regression analysis, which of the following correlation coefficients represents the strongest relationship between the independent and dependent variables? N/A




90.

The coefficient of determination between direct materials cost and units produced is nearest N/A




91.

Zerobase budgeting requires managers to: N/A


Justify expenditures that are increases over the prior period's budgeted amount


Justify all expenditures, not just increases over last year's amount


Maintain a fullyear budget intact at all times


Maintain a budget with zero increases over the prior period




92.

Direct material purchases equal N/A


Usage plus production needs.


Production needs plus target ending inventories.


Beginning inventories plus production needs.


Usage plus desired ending inventories less beginning inventories.




93.

The major steps in preparing the budget do not involve: N/A


Prepare a sales forecast.


Project sales variance.


Determine expected production volume.


Estimate manufacturing costs and operating expenses.




94.

The percentofsales method of forecasting is based on which of the following assumptions? N/A


All balance sheet accounts are tied directly to sales.


Most balance sheet accounts are tied directly to sales.


All income statement accounts are stable.


Answers A and C above.




95.

The master budget process usually begins with the\ N/A


Production budget.


Operating budget.


Financial budget.


Sales budget.




96.

Which of the following is normally included in the financial budget of a firm? N/A


Direct materials budget.


Selling expense budget.


Pro forma balance sheet.


Sales budget.




97.

All of the following are considered operating budgets except the N/A


Cash budget.


Materials budget.


Production budget.


Capital budget.




98.

_________________ offers a more pragmatic method of estimating collection and bad debt percentages by relating credit sales and collection data. N/A


Lagged regression analysis.


Queuing theory.


Network analysis.


Markov approach.




99.

____________________ is not a spreadsheet software package. N/A


Outlook


1_2_3


Excel


Quattro Pro




100.

Which of the following is not among the advantages of lagged regression over the Markov model when it comes to projecting cash flows? N/A


It requires a lot of data


It is inexpensive


There is no need to forecast future credit sales


It allows for statistical inferences



