The results show that Handy-man Services should have a fixed monthly service fee

Question

The results show that Handy-man Services should have a fixed monthly service fee with a ceiling of number of visits and / or have some charges beyond that limit.  Further, there should be some specific jobs, consuming more manpower / material, which should be covered with extra charges.

Question 1.1. (TCO 9) To guide cost allocation decisions, the cause-and-effect criterion (Points : 3)

       may allocate corporate salaries to divisions based on profits.

       is used less frequently than the other criteria.

       is the primary criterion used in activity-based costing.

       is a difficult criterion on which to obtain agreement.

Question 2.2. (TCO 9) A challenge to using cost-benefit criteria for allocating costs is that (Points : 3)

       the costs of designing and implementing complex cost allocations are not readily apparent.

       the benefits of making better-informed pricing decisions are difficult to measure.

       cost systems are being simplified and fewer multiple cost-allocation bases are being used.

       the costs of collecting and processing information keep spiraling upward.

Question 3.3. (TCO 9) Some companies only allocate corporate costs to divisions that are (Points : 3)

       direct costs.

       planned and under the control of division managers.

       output unit-level costs.

       perceived as causally related to division activities.

Question 4.4. (TCO 9) Identifying homogeneous cost pools (Points : 3)

       requires judgment and should be reevaluated on a regular basis.

       should include the input of management.

       should include a cost-benefit analysis.

       All of the above

Question 5.5. (TCO 9) The Hassan Corporation has an electric mixer division and an electric lamp division.  Of a $20,000,000 bond issuance, the electric mixer division used $14,000,000 and the electric lamp division used $6,000,000 for expansion.  Interest costs on the bond totaled $1,500,000 for the year.  What amount of interest costs should be allocated to the electric lamp division? (Points : 3)

       $450,000

       $6,000,000

       $4,200,000

       $1,050,000

Question 6.6. (TCO 10) The stage of the capital budgeting process in which a firm obtains funding for the project is the (Points : 3)

       obtain-information stage.

       implement the decision, evaluate performance, and learn stage.

       make-decisions-by-choosing-among-alternatives stage.

       make-predictions stage.

Question 7.7. (TCO 10) Assume your goal in life is to retire with $1.5 million.  How much would you need to save at the end of each year if interest rates average 5% and you have a 25-year work life? (Points : 3)

       $33,754

       $24,555

       $27,798

       $31,429

Question 8.8. (TCO 10) The net-present-value method focuses on (Points : 3)

       cash inflows.

       accrual-accounting net income.

       cash outflows.

       both cash inflows and cash outflows.

Question 9.9. (TCO 10) An important advantage of the net-present-value method of capital budgeting over the internal rate-of-return method is (Points : 3)

       the net present value method is expressed as a percentage.

       the net present values of individual projects can be added to determine the effects of accepting a combination of projects.

       there is no advantage.

       Both 1 and 2 are correct.

Question 10.10. (TCO 10) Upper Darby Park Department is considering a new capital investment.  The following information is available on the investment.  The cost of the machine will be $150,000.  The annual cost savings if the new machine is acquired will be $40,000.  The machine will have a five-year life, at which time the terminal disposal value is expected to be $20,000.  Upper Darby Park Department is assuming no tax consequences.  If Upper Darby Park Department has a required rate of return of 10%, which of the following is closest to the present value of the project? (Points : 3)

       $1,632

       $150,000

       $14,060

       $12,418

Explanation / Answer

Question 10.10. (TCO 10) Upper Darby Park Department is considering a new capital investment. The following information is available on the investment. The cost of the machine will be $150,000. The annual cost savings if the new machine is acquired will be $40,000. The machine will have a five-year life, at which time the terminal disposal value is expected to be $20,000. Upper Darby Park Department is assuming no tax consequences. If Upper Darby Park Department has a required rate of return of 10%, which of the following is closest to the present value of the project? (Points : 3)

$1,632

$150,000

$14,060-answer

$12,418

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.