Part I. Questions 1-10 are worth 3 points each. 1. In a make-or-buy decision, re

Question

Part I. Questions 1-10 are worth 3 points each. 1. In a make-or-buy decision, relevant costs include: A. fixed factory overhead costs applied to products B. fixed selling and administrative expenses C. unavoidable fixed costs D. avoidable fixed costs 2. In a sell or process further decision, which of the following costs is relevant? I. A variable production cost incurred after split-off. II. A fixed production cost incurred prior to split-off A. Only I B. Only II C. Both I and II D. Neither I nor II 3. The net present value and internal rate of return methods of capital budgeting are superior to the payback method because they A. are easier to implement B. consider the time value of money. C. require less data. D. reflect the effects of depreciation and income taxes. The internal rate of return for a project can be determined: A. only if the project's cash flows are constant. B. by finding the discount rate that yields a zero net present value for the project C. by subtracting the company's cost of capital from the project's profitability index D. only if the project profitability index is greater than zero. 4· 5. Which of the following represents the normal sequence in which the below budgets are prepared? A. Sales Budget, Budgeted Balance Sheet, Budgeted Income Statement B. Budgeted Balance Sheet, Sales Budget, Budgeted Income Statement C. Sales Budget, Budgeted Income Statement, Budgeted Balance Sheet D. Budgeted Income Statement, Sales Budget, Budgeted Balance Sheet Comparing actual results to a budget based on the actual activity for the period is possible with the use of a: A. monthly budget B. master budget. C. flexible budget D. rolling budget 6. 7. A static planning budget is: A. a budget for a single level of activity. B. a budget that ignores inflation. C. used only for fixed costs. D. used when the mix of products does not change.

Explanation / Answer

Q1 the answer to this question is (d) Avoidable Fixed cost

Q2 The answer to this question is (B) ony II - A fixed production cost incurred after the spilt off point.

Q3 The answer to this question is (B) Consider the time value of money .

Q4 The answer to this question is (B) By finding the discount rate that yields a zero net present value for the project.

Q5 The answer to this question is (C) Sales Budget , Budgeted income statement , budgeted balance sheet.

Q6 The answer to this question is (C) Flexible Budget

Q7 The answer to this question is (A) A budget for a single level of activity

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