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1 | |
Sunk costs are expenses which have no effect on a decision and therefore, should not be taken into account in considering investment alternatives. |
| | A) | True |
| | B) | False |
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2 | |
Depreciation refers to the allocation of cost due to deterioration of tangible assets. |
| | A) | True |
| | B) | False |
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3 | |
Activity-based costing allocates overhead costs using actual estimates of direct labor consumed by an activity. |
| | A) | True |
| | B) | False |
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4 | |
The net present value refers to the total stream of payments that an asset will generate in the future discounted to the present. |
| | A) | True |
| | B) | False |
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5 | |
An asset is purchased at a $10,000 value. The estimated salvage value of the asset at the end of 10 years is $1,000 and the useful life is 10 years. Which of the following is the straight line depreciation sum? |
| | A) | 800 |
| | B) | 900 |
| | C) | 1000 |
| | D) | 1100 |
| | E) | 1200 |
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6 | |
A cost that must be incurred if an investment is not made is a(n): |
| | A) | Sunk cost |
| | B) | Fixed cost |
| | C) | Avoidable cost |
| | D) | Opportunity cost |
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7 | |
A benefit foregone which results from choosing one investment over a better investment is an example of: |
| | A) | Fixed costs |
| | B) | opportunity costs |
| | C) | avoidable costs |
| | D) | semivariable costs |
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8 | |
Investment A has a payback period of 3 years and a present value of $40,000.
Investment B has a payback period of 4 years and present value of $50,000. |
| | A) | Investment A should be chosen. |
| | B) | Investment B should be chosen. |
| | C) | Both should be chosen with half invested in each. |
| | D) | Neither should be chosen. |
| | E) | It's a managerial decision with no clearly defined choice. |
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9 | |
Which of the following is NOT an underlying assumption of linear break-even analysis: |
| | A) | Selling price per unit is constant. |
| | B) | Variable costs per unit remain constant. |
| | C) | Fixed costs remain constant. |
| | D) | The volume of units sold affects the per unit costs. |
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10 | |
If process 1 has fixed costs of $10,000 and variables costs of $50 per unit, and process 2 has fixed costs of $20,000 and variable costs of $30 per unit, what is the break-even point between these two processes? |
| | A) | 500 |
| | B) | 667 |
| | C) | 2,000 |
| | D) | 3,750 |
| | E) | 5,000 |
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11 | |
Which of the following is NOT an economic investment decision? |
| | A) | Purchasing new facilities |
| | B) | Improving labor efficiency |
| | C) | Make or buy |
| | D) | Closing a plant |
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12 | |
Which of the following is NOT an Excel financial function? |
| | A) | Break-even |
| | B) | Future value |
| | C) | Net-present value |
| | D) | Internal rate of return |
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2002 McGraw-Hill Higher Education