I need to do questions 2, 5, 7, 10-11, 16, 18-21, 23-25, 27, 29-30, 35-38,41, 43-45, 47-50, 53, 55, 57 of the accounting packet attached below.
Accounting Version 2 Name: __________________________ Date: _____________ 1. The time value of money concept is given consideration in long-range investment decisions by A) weighting cash flows with subjective probabilities. B) assigning greater value to more immediate cash flows. C) investing only in short-term projects. D) assuming equal annual cash flow patterns. 2. Cost analysis for capital investment decisions is best accomplished by techniques that A) emphasize the liquidity of invested costs. B) clearly distinguish different cost behavior patterns. C) accrue, defer, and allocate costs to short time periods. D) discount cash flows over a project's life. 3. In a proposal to increase the production of clock radios, the sales managers of Rinaldo Electronics reported the total additional cost required to meet the increased production level. The increase in total cost is known as the A) out-of-pocket cost. B) controllable cost. C) incremental cost. D) opportunity cost. 4. The purpose of incremental analysis is to find the alternative A) that contributes the most to profits. B) with the fewest relevant costs. C) with the lowest fixed costs. D) that brings in the most revenue. 5. During 20x6, America, Inc., produced, among other products, 8,700 cameras, incurring the following unit costs: $5 in direct materials, $3 in direct labor, $2 in variable overhead, $4 in fixed overhead, $0.50 in variable selling and administrative expenses, and $1 in fixed selling and administrative expenses. An outsider had offered to produce the cameras for $12 each. Assuming that the factory space would have been idle otherwise, acceptance of the outside offer would have A) lost the company $13,050. B) saved the company $18,050. C) lost the company $8,700. D) saved the company $33,050. Use the following to answer questions 6-7: Seattle, Inc., is contemplating a project that costs $180,000. Expectations are that annual cash revenues will be $70,000 and annual expenses (including depreciation) will total $30,000. The project has a six-year useful life and a residual value of $30,000. 6. The accounting rate of return for the project is A) 66.7 percent. B) 38.1 percent. C) 22.2 percent. D) 53.3 percent. 7. The project's payback period is A) 2.57 years. B) 2.14 years. C) 2.31 years. D) 2.77 years. 8. The undepreciated portion of the original cost of a fixed asset is the A) accumulated depreciation. B) residual value. C) carrying value. D) depreciation expense. 8. The undepreciated portion of the original cost of a fixed asset is the A) accumulated depreciation. B) residual value. C) carrying value. D) depreciation expense. 9. Qualitative factors used by decision makers include all of the following except A) competition. B) timeliness. C) social issues. D) revenue from fees. 10. Which of the following could not be a relevant cost in deciding whether or not to eliminate a producing department? A) Revenue that could be generated by renting out the department's space B) The carrying value of the department's equipment C) The current residual value of the department's equipment D) The salary of a supervisor who would be laid off 11. With regard to the time value of money, A) the present value and the future value have to be equal. B) amounts are adjusted for inflation over the period of the investment. C) the amount of the present value is always higher than the future value. D) the future value amount is always higher than the present value amount. 12. Sunk costs are omitted from decision analysis A) never. B) sometimes. C) only if immaterial. D) always. 13. The point at which products are separated in a joint production process is the A) joint product point. B) separation point. C) breakeven point. D) split-off point. Use the following to answer questions 14-15: Memphis Co. is going to purchase a machine for $83,200 that will increase cash flows by $40,000 in the first year, $30,000 the second year, and $25,000 the third year. The machine will have no residual value. The minimum rate of return is 10 percent. The present value factors for the three years are 0.909, 0.826, and 0.751, respectively. 14. The machine's actual rate of return is A) greater than 10 percent. B) less than 10 percent. C) 10 percent. D) Unable to determine from the data given 15. The machine's net present value is A) $79,915. B) $21,800. C) ($4,286). D) ($3,285). Use the following to answer questions 16-17: Anderson Co. makes and uses 5,000 components each year in its manufacturing operations. An outside supplier has offered to supply the components to Anderson at $66 per unit. Anderson's production costs are as follows: Direct materials $ 8 Direct labor 32 Variable overhead 12 Fixed overhead (based on normal capacity) 34 If Anderson accepts the order, $8 of fixed overhead per unit will be eliminated. 16. What is the relevant cost to produce one unit? A) $52 B) $78 C) $60 D) $86 17. If the offer is accepted, operating income will A) decrease by $30,000. B) increase by $60,000. C) decrease by $70,000. D) increase by $100,000. 18. The net present value method of evaluating proposed investments A) applies only to mutually exclusive investment proposals. B) measures a project's time-adjusted rate of return. C) discounts cash flows at the minimum desired rate of return. D) ignores cash flows beyond the payback period. 19. When using the net present value method to compare keeping an old building or disposing of it and acquiring a new building, the current cash residual value of the old building should be A) viewed as a cash flow. B) irrelevant to the decision. C) a subtraction from the price paid for the new building. D) an addition to the price paid for the new building. 20. The costs incurred beyond the split-off point are called A) joint product costs. B) by-product costs. C) incremental costs. D) split-off point costs. 20. The costs incurred beyond the split-off point are called A) joint product costs. B) by-product costs. C) incremental costs. D) split-off point costs. 21. Candidates for outsourcing would include A) payroll processing. B) information management. C) custodial services. D) all of these. 22. Capital investment analysis involves all of the following except A) analyzing the sales mix. B) selecting the best alternative. C) dividing available capital investment funds. D) preparing reports for management. 23. Omaha, Inc., is expected to have the following cash revenues and expenses (other than depreciation) in 20x7: Sales $98,000 Deprecia tion expense $ 5,000 Selling, general, and Income tax expense 3,000 administ rative expenses Cost of goods sold 45,000 (excludi ng depreciat ion) 10,000 Omaha's estimated 20x7 net cash flows are A) $40,000. B) $37,000. C) $30,000. D) $35,000. 23. Omaha, Inc., is expected to have the following cash revenues and expenses (other than depreciation) in 20x7: Sales $98,000 Deprecia tion expense $ 5,000 Selling, general, and Income tax expense 3,000 administ rative expenses Cost of goods sold 45,000 (excludi ng depreciat ion) 10,000 Omaha's estimated 20x7 net cash flows are A) $40,000. B) $37,000. C) $30,000. D) $35,000. 24. When considering the time value of money, use compounding to find the __________ value of money now held. A) discounted B) future C) present D) historical 25. An old machine that originally cost $9,500 thus far has accumulated depreciation of $1,900. The remaining useful life is four years, with no salvage value at the end of its useful life. A new machine is now available that costs $8,500, with a useful life of five years and no residual value. The old machine could be sold now for $3,100. The annual cash operating costs for the old machine are $5,000, but for the new machine they would be only $2,500. Gross revenue from the products would be $12,000 annually for either machine. The company should A) keep the old machine to avoid an $8,500 decrease in cash. B) keep the old machine to avoid a $3,100 loss on its disposal. C) keep the old machine to avoid a $4,500 loss on its disposal. D) replace the old machine. 26. Boston Corp. is evaluating three projects. Each project will return a total of $600,000 to the company in cash flows over a three-year period. The cash flows for the three projects are as follows: Year 1 Year 2 Year 3 Total Projec t A $300,0 00 $200,0 00 $100,0 00 $600,0 00 Projec t B 200,00 0 200,00 0 200,00 0 600,00 0 Projec t C 100,00 0 200,00 0 300,00 0 600,00 0 Which project represents the best investment for Boston? A) Project B B) All projects are equally good investments. C) Project A D) Project C 27. In the capital investment decision process, the management accountant's responsibilities lie in the area of A) final selection of alternatives. B) initial screening. C) methods of computation and final screening. D) detection of facility need. Use the following to answer questions 28-29: The Norran Company needs 15,000 units of a certain part to use in its production cycle. If Norran buys the part from Waterloo Company instead of making it, Norran could not use the released facilities in another activity; thus, all of the fixed overhead applied will continue regardless of what decision is made. Accounting records provide the following data: Cost to Norran to make the part: Direct materials, $3 Direct labor, $12 Variable overhead, $13 Fixed overhead applied,