Question Details

BUSN 278 WEEK 8 Final Exam 
Question 1.1. (TCO 1) Which one of the following is not a benefit of budgeting? (Points : 5)
      


Question 2.2. (TCO 2) Which of the following is not a quantitative forecasting method? (Points : 5)
      


Question 3.3. (TCO 3) Which of the following is not used to evaluate the accuracy of regression results? (Points : 5)
       


Question 4.4. (TCO 4) Which of the following statements regarding the risk associated with R & D activities is incorrect? (Points : 5)
       


Question 5.5. (TCO 5) Program budgeting does not include _____.
(Points : 5)
       

Question 6.6. (TCO 6) When using the payback period technique, the payback period is expressed in terms of _____.
(Points : 5)
       

Question 7.7. (TCO 6) The profitability index is computed by dividing the _____.
  (Points : 5)
      


Question 8.8. (TCO 6) A project that cost $80,000 with a useful life of 5 years is being considered. Straight-line depreciation is being used and salvage value is $5,000. The project will generate annual cash inflows of $21,375. The accounting rate of return is _____.
(Points : 5)
        


Question 9.9. (TCO 6) If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its 10-year life, and generates annual net cash inflows of $30,000 each year, the payback period is _____. (Points : 5)
        


Question 10.10. (TCO 6) Selma Inc. is comparing several alternative capital budgeting projects as shown below.
 
Projects	A	B	C
Initial Investment	$40,000	$60,000	$80,000
Present value of cash inflows	$60,000	$55,000	$100,000

 



Question 11.11. (TCO 6) Cleaners, Inc. is considering purchasing equipment costing $30,000 with a 6-year useful life. The equipment will provide cost savings of $7,300 and will be depreciated straight-line over its useful life with no salvage value. Cleaners requires a 10% rate of return. What is the approximate net present value of this investment? (Points : 5)
       


Question 12.12. (TCO 7) Which of the following would not appear as a fixed expense on a selling and administrative expense budget? (Points : 5)
      


Question 13.13. (TCO 7) Sargent.Com plans to sell 2,000 purple lawn chairs during May, 1,900 in June, and 2,000 during July. The company keeps 15% of the next month- sales as ending inventory. How many units should Sargent.Com produce during June? (Points : 5)
       


Question 14.14. (TCO 8) Which of the following is not a cause of profit variance? (Points : 5)
        

Question 15.15. (TCO 9) A static budget is appropriate in evaluating a manager's performance if _____.
(Points : 5)
       

Question 16.16. (TCO 9) If the activity level increases 10%, total variable costs will _____.
(Points : 5)
       


Question 17.17. (TCO 9) Using the high-low method, what is the unit variable cost for the following information?
 
Month	Miles	Total Cost
January	80,000	$96,000
February	50,000	$80,000
March	70,000	$94,000
April	90,000	$130,000
(Points : 5)
       


Question 18.18. (TCO 10) What is the method used to determine whether the budgeting process is operating effectively? (Points : 5)
        





1.	(TCO 7) At Lakeside Manufacturing, budgets are the responsibility of everyone. Each department collaborates in determining its expected needs, and sales personnel determine the likely sales volume. Al Talbott, one of the production managers, believes in building plenty of slack into everything, including his estimates of ending inventory of work in process. As the accounting manager, write a memo to Mr. Talbott, explaining why the ending inventory figure should be extremely accurate, with as little slack as possible. (Points : 20)



2.	(TCO 9) Understanding how costs behave can help managers plan operations and choose between various courses of action.  
 
Part (a): Identify and describe the three types of cost behavior, including examples of each.  
Part (b): As a manager, which cost behavior would you prefer and why? (Points : 20)



3. (TCO 6) Savanna Company is considering two capital investment proposals. Relevant data on each project are as follows.
 
 	Project Red	Project Blue
Capital investment	$400,000	$560,000
Annual net income	$50,000	$80,000
Annual cash flows	$100,000	$150,000
Estimated useful life	8 years	8 years
 
Savanna requires an 8% rate of return on all new investments.
Part (a): Compute the payback period for each project.
Part (b): Compute the net present value for each project.
Part (c): Compute the accounting rate of return for each project.
Part (d): Which project should Savanna select?


4. (TCO 7) The management of Horton Company estimates that credit sales for August, September, October, and November will be $270,000, $375,000, $420,000, and $240,000, respectively. Experience has shown that collections are made as follows.
 
In month of sales	25%
In first month after sale	60%
In second month after sales	10%

 
Determine the collections from customers in October and November. Show all computations. (Points : 30)


5. (TCO 8) Northern Company- budgeted and actual sales for 2009 were as follows.
 
Product	Budgeted Sales	Actual Sales
A	6,000 units at $8.00 per unit	6,810 units at $7.80 per unit
B	5,000 units at $10.00 per unit	4,720 units at $10.40 per unit

 
Part (a): Calculate the sales volume variance.
Part (b): Calculate the sales price variance.
Part (c): Calculate the total sales variance. (Points : 30)


6. (TCO 9) The Mays Clinic has the following monthly telephone records and costs.
 
Calls	Costs
2,000	$2,400
1,500	2,000
2,200	2,600
2,500	2,900
2,300	2,700
1,700	2,200

 
Identify the fixed and variable cost elements using the high-low method. (Points : 30)