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1.
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Fixed costs are $60,000 and variable costs are 40% of sales. Break-even sales equals N/A
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  150000
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100000
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50000
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80000
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2.
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You sell a product at $20 per unit with variable costs of $5 per unit and total fixed costs of $30,000. The after-tax profit is $120,000 and the tax rate is 40%. How many units must be sold to earn the after-tax profit? N/A
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3.
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At the breakeven point, the contribution margin equals total N/A
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Variable costs.
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Sales revenues.
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Selling and administrative costs.
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Fixed costs.
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4.
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Cost-volume profit relationships that are curvilinear may be analyzed linearly by considering only N/A
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Fixed and semivariable costs.
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Relevant fixed costs.
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Relevant variable costs.
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A relevant range of volume.
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5.
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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
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Operating leverage.
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Margin of safety.
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Yield.
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Accounting rate of return.
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6.
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The breakeven point in units decreases when unit variable costs N/A
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Increase and sales price remains.
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Remain unchanged and sales price decreases.
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Decrease and sales price remains unchanged.
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Decrease and sales price decreases.
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7.
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Cost-volume-profit analysis assumes over the relevant range that N/A
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Total costs are linear.
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Fixed costs are nonlinear.
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Variable costs are nonlinear.
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Selling prices are nonlinear.
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8.
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Cost-volume-profit analysis assumes that over the relevant range N/A
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Variable costs are nonlinear.
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Fixed costs are nonlinear.
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Selling prices are unchanged.
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Total costs are unchanged.
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9.
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The relevance of a particular cost to a decision is determined by the N/A
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Potential effect on the decision.
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Size of the cost.
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Riskiness of the decision.
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Accuracy and verifiability of the cost.
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10.
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To find the cash break-even point, the charges to be subtracted from total fixed costs are: N/A
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Depreciation expenses
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Capital gain
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Target income
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Margin of safety
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11.
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In a multiproduct or service business, to compute the break-even for an individual product or service, it is not necessary to compute: N/A
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Weighted average contribution margin
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Sale mix ratio
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Contribution margin ratio
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Fixed cost allocated to each product or service
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12.
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The present value of an annuity of $1 table is used to determine a future value. T F N/A
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13.
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Which table has the highest factor? N/A
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Present value of $1
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Future value of $1
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Present value of an annuity of $1
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Future value of an annuity of $1
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14.
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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
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Present value of $1
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Future value of $1
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Present value of an annuity of $1
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Future value of an annuity of $1
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15.
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The present value of a $1 table is used to determine a future value. T F N/A
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16.
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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
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17.
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A graphic description of the sequence of possible outcomes is referred to as: N/A
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Simulation
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Decision tree
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Sensitivity analysis
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Capital budgeting
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18.
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An initial investment of $20,000 generates annual cash inflows of $8,000. The payback period is: N/A
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19.
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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
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20.
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The capital budget is a (n) N/A
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Plan to insure that there are sufficient funds available for the operating needs of the company.
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Exercise that sets the long-range goals of the company including the consideration of the company including the consideration of external influences.
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Plan that coordinates and communicates a company's plan for the coming year to all departments and divisions.
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Plan for the best selection and financing of long-term investment proposals.
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21.
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Capital budgeting techniques are least likely to be used in evaluating the N/A
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Acquisition of new aircraft by a cargo company.
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Design and implementation of a major advertising program.
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Adoption of a new method of allocating nontraceable costs to product lines.
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Sale by a conglomerate of an unprofitable division.
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22.
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The capital budgeting model that is ordinarily considered the best model for long-range decision making is the N/A
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Payback model
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Accounting rate of return model.
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Unadjusted rate of return model.
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Net present value model.
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23.
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The internal rate of return (IRR) is the N/A
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Hurdle rate.
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Rate of interest for which the net present value is greater than 1.0.
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Rate of interest for which the net present value is equal to zero.
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Accounting rate of return.
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24.
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The ratio of cash plus marketable securities plus accounts receivable divided by current liabilities is called: N/A
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Current ratio
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Quick ratio
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Working capital ratio
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Cash flow ratio
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25.
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The earnings per share is computed for: N/A
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Common stock
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Nonredeemable preferred
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Redeemable preferred
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Common stock and fully diluted preferred stock
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26.
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An increase in the current ratio while the quick ratio remains constant means a buildup in: N/A
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Cash
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Long-term debt
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Current liabilities
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Inventory
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27.
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Using financial leverage is a good financial strategy from the viewpoint of stockholders of companies having: N/A
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A high debt ratio
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Cyclical highs and lows
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Steady or rising profits
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A steadily declining current ratio
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28.
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The price/earnings ratio: N/A
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Measures the past earning ability of the firm
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Is a gauge of future earning power as seen by investors
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Relates price to dividends
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Relates price to total net income
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29.
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What type of ratio is earnings per share? N/A
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Profitability ratio.
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Activity ratio.
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Liquidity ratio.
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Leverage ratio.
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30.
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A measure of long-term debt-paying ability is a company’s N/A
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Length of the operating cycle.
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Return on assets.
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Inventory turnover.
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Times interest earned.
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31.
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Which of the following measures the time needed to turn cash into inventory, inventory into receivables, and receivables back into cash? N/A
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Accounting cycle
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Quick ratio
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Payout ratio
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Return on equity
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32.
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An increasing trend in audit fees may indicate a problem with: N/A
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Internal control
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Accounting estimates
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Book income vs. Taxable income
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Discretionary costs
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33.
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Quality of earnings is improved when a company has a high degree of estimated expenses. T F N/A
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34.
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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
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35.
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Return on investment is one method under which center concept? N/A
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Revenue center
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Investment center
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Cost center
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Profit center
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36.
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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
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Top-down budgeting.
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Life-cycle budgeting.
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Static budgeting.
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Flexible budgeting.
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37.
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Which of the following is a purpose of standard costing? N/A
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Determine breakeven production level.
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Control costs.
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Eliminate the need for subjective decisions by management.
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Allocate cost with more accuracy.
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38.
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An efficiency variance equals N/A
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A flexible budget amount minus a static budget amount.
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Actual operating income minus flexible budget operating income.
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Actual unit price minus budgeted unit price, times the actual units produced.
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Budgeted unit price times the difference between actual inputs and budgeted inputs for the actual activity level achieved.
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39.
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Which of the following factors should not be considered when deciding whether to investigate a variance? N/A
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Magnitude of the variance and the cost of investigation.
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Trend of the variances over time.
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Likelihood that an investigation will eliminate future occurrences of the variance.
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Whether the variance is favorable or unfavorable.
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40.
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Which department is customarily held responsible for an unfavorable materials usage variance? N/A
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Quality control.
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Purchasing.
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Engineering.
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Assembly.
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41.
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The least complex segment or area of responsibility for which costs are allocated is a(n) N/A
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Profit center.
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Investment center.
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Contribution center.
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Cost center.
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42.
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Responsibility accounting defines an operating center that is responsible for revenue and costs as a(n) N/A
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Profit center.
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Revenue center.
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Division.
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Operating unit.
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43.
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Which one of the following organizational segments is held responsible for the revenues earned and costs incurred in that center? N/A
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Revenue center.
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Profit center.
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Cost center.
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Investment center.
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44.
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The sales price variance equals: N/A
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(Actual selling price vs. Budgeted selling price) x budgeted units sold
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Actual selling price x budgeted units sold
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(actual selling price vs. Budgeted selling price) x actual units sold
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Actual selling price vs. Budgeted selling price
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45.
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The sales volume variance equals: (actual quantity vs. budgeted quantity) x actual selling price. T F N/A
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46.
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The sales mix variance equals: (actual quantity vs. budgeted quantity) x actual selling price. T F N/A
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47.
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The sales quantity variance equals N/A
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Actual units x (budgeted weighted-average CM for planned mix - budgeted weighted-average CM for actual mix).
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(Actual sales at budget mix - budget sales at budget mix) x budget CM (or gross profit / unit).
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(Actual market share percentage - budgeted market share percentage) x actual market size in units x budgeted weighted-average CM.
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(Actual price û standard price) x actual units
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48.
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The cost volume variance equals N/A
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(Actual sales budget sales) x budget cost per unit.
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(Actual units - master budget units) x budgeted weighted-average UCM for the planned mix.
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Budgeted market share percentage x (actual market size in units - budgeted market size in units) x budgeted weighted-average UCM.
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(Actual market share percentage - budgeted market share percentage) x actual market size in units x budgeted weighted-average UCM.
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49.
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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
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3500000
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1000000
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0.8
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1100000
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50.
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Residual income is a better measure for performance evaluation of an investment center manager than return on investment because N/A
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The Problems associated with measuring the asset base are eliminated.
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Desirable investment decisions will not be neglected by high-return divisions.
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Only the gross book value of assets needs to be calculated.
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The arguments about the implicit cost of interest are eliminated.
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51.
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________________ is not an action management can take to enhance rate of return on investment (ROI): N/A
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Improve margin by reducing expenses, raising selling prices, or increasing sales faster than expenses
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Improve turnover by increasing sales while holding the invest¼ment in assets relatively constant, or by reducing assets
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Improve both
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Enhance the cost of capital.
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52.
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Improving Economic Value Added (EVA) can be achieved by N/A
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Invest capital in high-performing projects
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Use more capital
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Increase profit using more capital
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Increase the cost of capital
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53.
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The Du Pont formula combines the income statement and balance sheet into a static measure of performance. T F N/A
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54.
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Residual income (RI) differs from ROI because N/A
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RI is a measure over time, while ROI represents the results for one period.
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The imputed interest rate used in calculating RI is more easily derived than the target rate that is compared to the calculated ROI.
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RI focuses on maximizing absolute dollars of income rather than a specific rate of return.
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Average investment is employed with RI while year-end investment is employed with ROI.
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55.
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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
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56.
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The added profitability generated from giving credit to marginal customers is the: N/A
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Contribution margin
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Gross margin
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Opportunity cost
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Sales obtained
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57.
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"Mail float" is how long it takes for a check to go from payor to receiver. T F N/A
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58.
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A stock that does not have a track record of high earnings and dividends is referred to as: N/A
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Income
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Growth
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Speculative
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Defensive
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59.
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Stock selection based on studying trends in charts of volume and price of a security is referred to as: N/A
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Fundamental analysis
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Breadth index
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Moving average
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Technical analysis
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60.
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A put option is an option to buy a security at a stipulated price during a stated time period. T F N/A
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61.
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The return on investment typically comes from two sources: __________ and capital gains (losses). N/A
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Liquidity
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Selling price
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Purchase price
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Current income
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62.
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As a measure of relative risk, we use the N/A
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Coefficient of variation
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Holding period of return
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Standard deviation
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Geometric return
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63.
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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
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64.
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A call option is an option to buy a security at a stipulated price during a stated time period. T F N/A
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65.
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Standard deviation divided by average net income is called: N/A
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Beta
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Instability index of earnings
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Elastic demand
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Coefficient of variation
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66.
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Factors that an investor considers in evaluating a firms stock include all except: N/A
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Financial health
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Industry factors
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Number of future investors
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Future outlook of the company
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67.
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Primary assumptions underlying technical analysis do not include N/A
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Market action discounts everything.
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History repeats itself.
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Future is self-evident.
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Supply and demand determine market price.
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68.
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Which of the following is not a tool for technical analysis? N/A
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Market breadth
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Financial statement analysis
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Relative strength analysis
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Moving averages
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69.
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When you buy less than 100 shares of a company you have purchased N/A
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An odd lot.
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A round lot.
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Both an odd lot and a round lot.
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A combined lot
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70.
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In investment terminology, selling stock that you have borrowed is known as a N/A
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Margin sale
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Short sale
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Limit sale
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Stop-loss sale
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71.
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One of the best sources of financial market and individual security price data that appears on a weekly basis is N/A
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Barron's
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Forbes
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U.S. News & World Report
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Wall Street Journal
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72.
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The most widely followed stock average is the N/A
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Dow Jones Industrial Average
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Standard & Poor's Index
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American Stock Exchange Index.
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Wall Street Journal Index.
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73.
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_______ is a portfolio characteristic which leads to reduced risk with good return. N/A
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Maturity
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Price-earnings ratio
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Diversification
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Duration
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74.
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Portfolio management involves making decisions in order to N/A
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Buy low and sell high
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Maximize risk and return
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Accept risk
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Meet your investment needs and objectives
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75.
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Buying _______ would not be an investment. N/A
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Common stock
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An automobile
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Real estate
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Gold
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76.
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________________ is not a key indicator of market and stock performance. N/A
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Trading volume
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Return on equity
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Market breadth
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Barron's Confidence Index
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77.
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The opportunity cost associated with failing to pay a supplier on terms of 2/10, net/30 is: N/A
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78.
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Unsecured short-term notes issued by the highest quality companies is called: N/A
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Finance company loan
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Commercial paper
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Warrant
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Bond
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79.
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A continuing agreement for loans up to a specified amount is referred to as line of credit. T F N/A
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80.
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A merger of two companies in unrelated industries is what type of combination? N/A
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Vertical
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Level
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Conglomerate
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Horizontal
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81.
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A holding company's only purpose is to buy the securities of other companies. T F N/A
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82.
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Exponential smoothing uses averages that are updated as new information is received. T F N/A
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83.
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Which of the following methods involves an extensive use of monthly historical data for estimating budget activities? N/A
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Time series analysis
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Market research
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Linear programming
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The Delphi technique
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84.
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Classical decomposition of time series do not deal with N/A
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Seasonal
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Exponential
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Cyclical
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Trend
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85.
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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
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86.
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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 labor-hour? N/A
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87.
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The letter y in the standard regression equation of y = a + bx is best described as the N/A
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Dependent variable
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Independent variable
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Variable cost coefficient
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Constant coefficient
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88.
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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
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Correlation.
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Cycle projection.
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Trends analysis.
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Regression.
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89.
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In regression analysis, which of the following correlation coefficients represents the strongest relationship between the independent and dependent variables? N/A
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90.
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The coefficient of determination between direct materials cost and units produced is nearest N/A
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91.
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Zero-base budgeting requires managers to: N/A
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Justify expenditures that are increases over the prior period's budgeted amount
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Justify all expenditures, not just increases over last year's amount
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Maintain a full-year budget intact at all times
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Maintain a budget with zero increases over the prior period
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92.
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Direct material purchases equal N/A
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Usage plus production needs.
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Production needs plus target ending inventories.
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Beginning inventories plus production needs.
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Usage plus desired ending inventories less beginning inventories.
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93.
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The major steps in preparing the budget do not involve: N/A
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Prepare a sales forecast.
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Project sales variance.
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Determine expected production volume.
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Estimate manufacturing costs and operating expenses.
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94.
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The percent-of-sales method of forecasting is based on which of the following assumptions? N/A
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All balance sheet accounts are tied directly to sales.
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Most balance sheet accounts are tied directly to sales.
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All income statement accounts are stable.
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Answers A and C above.
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95.
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The master budget process usually begins with the\ N/A
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Production budget.
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Operating budget.
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Financial budget.
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Sales budget.
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96.
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Which of the following is normally included in the financial budget of a firm? N/A
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Direct materials budget.
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Selling expense budget.
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Pro forma balance sheet.
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Sales budget.
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97.
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All of the following are considered operating budgets except the N/A
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Cash budget.
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Materials budget.
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Production budget.
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Capital budget.
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98.
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_________________ offers a more pragmatic method of estimating collection and bad debt percentages by relating credit sales and collection data. N/A
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Lagged regression analysis.
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Queuing theory.
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Network analysis.
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Markov approach.
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99.
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____________________ is not a spreadsheet software package. N/A
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Outlook
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1_2_3
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Excel
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Quattro Pro
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100.
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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
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It requires a lot of data
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It is inexpensive
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There is no need to forecast future credit sales
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It allows for statistical inferences
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