Reference no: EM133154608
Questions -
Q1. Bond Co. is using the target cost approach on a new product. Information gathered so far reveals:
Expected annual sales 400,000 units
Desired profit per unit $0.35
Target cost $168,000
What is the target selling price per unit?
a. $0.42
b. $0.70
c. $0.35
d. $0.77
Q2. Boomer Boombox Inc. wants to produce and sell a new lightweight radio. Desired profit per unit is $1.84. The expected unit sales price is $22 based on 10,000 units. What is the total target cost?
a. $201,600
b. $220,000
c. $18,400
d. $238,400
Use the following information for questions 3 - 6.
Custom Shoes Co. has gathered the following information concerning one model of shoe: Variable manufacturing costs $40,000
Variable selling and administrative costs $20,000
Fixed manufacturing costs $160,000
Fixed selling and administrative costs $120,000
Investment $1,700,000
ROI 30%
Planned production and sales 5,000 pairs
Q3. What is the total cost per pair of shoes?
a. $40
b. $68
c. $168
d. $96
Q4. What is the desired ROI per pair of shoes?
a. $68
b. $168
c. $102
d. $170
Q5. What is the target selling price per pair of shoes?
a. $142
b. $170
c. $114
d. $158
Q6. What is the markup percentage?
a. 150%
b. 255%
c. 850%
d. 182%
Q7. The following data is available for Wheels 'N Spokes Repair Shop for 2016:
Repair technicians' wages $360,000
Fringe benefits 80,000
Overhead 60,000
Total $500,000
The desired profit margin is $40 per labor hour. The material loading charge is 40% of invoice cost. It is estimated that 5,000 labor hours will be worked in 2016.
In March 2016, Wheels 'N Spokes repairs a bicycle that takes two hours to repair and uses parts of $240. The bill for this repair would be
a. $520.
b. $560.
c. $592.
d. $616.
Q8. If there were 60,000 pounds of raw materials on hand on January 1, 120,000 pounds are desired for inventory at January 31, and 410,000 pounds are required for January production, how many pounds of raw materials should be purchased in January?
a. 350,000 pounds
b. 530,000 pounds
c. 290,000 pounds
d. 470,000 pounds
Q9. Kam Department Store reported the following information for 2016:
October November December
Budgeted sales $1,240,000 $1,160,000 $1,440,000
All sales are on credit.
Customer amounts on account are collected 50% in the month of sale and 50% in the following month.
How much cash will Kam receive in November?
a. $580,000
b. $1,300,000
c. $1,200,000
d. $1,160,000
Q10. The following information was taken from Southgate Industry's cash budget for the month of July:
Beginning cash balance $480,000
Cash receipts 304,000
Cash disbursements 544,000
If the company has a policy of maintaining a minimum end of the month cash balance of $400,000, the amount the company would have to borrow is
a. $160,000.
b. $80,000.
c. $240,000.
d. $96,000.
Q11. A company's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were:
January $360,000
February 216,000
March 540,000
The cash inflow in the month of March is expected to be
a. $406,800.
b. $307,800.
c. $324,000.
d. $388,800.
Q12. Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135. Dillon's total materials variance is
a. $450 F.
b. $135 U.
c. $465 U.
d. $600 U.
Q13. Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135. Dillon's materials price variance is
a. $135 U.
b. $465 F.
c. $600 F.
d. $1,050 F.
Q14. Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Dillon used 3,100 pouds of materials at a total cost of $18,135. Dillon's materials quantity variance is
a. $135 F.
b. $465 U.
c. $600 U.
d. $1,050 U.
Q15. Dillon has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000 units, Dillon used 3,850 hours of labor at a total cost of $46,970. Dillon's total labor variance is
a. $1,030 U.
b. $800 U.
c. $1,030 F.
d. $1,930 F.
Q16. Dillon has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000 units, Dillon used 3,850 hours of labor at a total cost of $46,970. Dillon's labor price variance is
a. $770 U.
b. $800 U.
c. $1,030 F.
d. $1,930 F.
Q17. Dillon has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000 units, Dillon used 3,850 hours of labor at a total cost of $46,970. Dillon's labor quantity variance is
a. $770 U.
b. $770 F.
c. $1,800 F.
d. $1,930 F.
Computing Net Present Value, Internal Rate of Return, and Payback Period - Questions 18 - 23.
FasTrac is considering investing in a Project A and Project B which will require an initial investment of $16,000. Assume FasTrac requires a 11% annual return. The expected annual cash inflows are as follows:
|
Project A
|
Project B
|
|
1 $3,000
|
1 $4,000
|
|
2 $4,000
|
2 $4,000
|
|
3 $4,000
|
3 $4,000
|
|
4 $4,000
|
4 $4,000
|
|
5 $5,000
|
5 $4,000
|
|
6 $3,000
|
6 $4,000
|
|
7 $2,000
|
7 $4,000
|
|
8 $2,000
|
8 $4,000
|
Q18. What is the NPV for Project A?
A. $1,735.85
B. $1,911.23
C. $2,235.67
D. $2,366.95
Q19. What is the IRR for Project A?
A. 12.25%
B. 14.47%
C. 16.25%
D. 18.30%
Q20. What is the payback period for Project A?
A. 3.5 years
B. 3.75 years
C. 4.0 years
D. 4.2 years
Q21. What is the NPV for Project B?
A. $4,154.35
B. $4,425.93
C. $4,584.49
D. $4,750.35
Q22. What is the IRR for Project B?
A. 18.62%
B. 16.58%
C. 14.35%
D. 12.10%
Q23. What is the payback period for Project B?
A. 3.5 years
B. 4.0 years
C. 4.25 years
D. 4.60 years
Q24. If an investment proposal has a positive net present value, it should be
A. accepted
B. rejected
Q25. If an investment proposal has a negative net present value, it should be
A. accepted
B. rejected
Q26. The internal rate of return is the interest rate that results in a
a. positive NPV.
b. negative NPV.
c. zero NPV.
d. positive or negative NPV.
Q27. Future Value of $1
John and Mary Rich invested $15,000 in a savings account paying 5.25% interest at the time their son, Mike, was born. The money is to be used by Mike for his college education. On his 18th birthday, Mike withdraws the money from his savings account. How much did Mike withdraw from his account?
A. $42,755.32
B. $30,345.27
C. $35,233.89
D. $37,678.11
Q28. Future Value of Annuity of $1
John and Char Lewis' daughter, Debra, has just started high school. They decide to start a college fund for her and will invest $3,000 in a saving account at the end of each year she is in high school (4 payments total). The account will earn 6.5% interest compounded annually. How much will be in the college fund at the time Debra graduates from high school?
A. $12,345.74
B. $13,221.52
C. $14,864.39
D. $15,211.28
Q29. Present Value of $1
Assume an investment has an 8% annual rate of return. How much money must be invested now to grow to $1,000,000 in 40 years?
A. $38,856.98
B. $58,345.75
C. $46,030.93
D. $85,843.21
Q30. Present Value of Annuity of $1
You are evaluating financing options for a loan on a house. You decide that the maximum mortgage payment you can afford is $650 per month. The annual interest rate is 8.4%. If you get a mortgage that requires you to make monthly payments over a 30-year period, what is the maximum home loan you can afford?
A. $80,455.37
B. $82,349.58
C. $85,320.01
D. $90,346.55
Q31. Computing a Car Payment
Assume you are financing the purchase of a used car with a four-year loan. The loan has a 6% stated annual interest rate, compounded monthly. The price of the car is $8,000. What is the monthly car payment assuming that the payments start one month after the purchase?
A. $187.88
B. $195.49
C. $203.40
D. $209.57
Q32. Saving for Retirement
Assume you want to start saving for retirement at age 25. You plan on investing $500 per month in a mutual fund that will earn 8% per year. How much will you have in your retirement account when you retire at age 65?
A. $242,545.78
B. $552,685.35
C. $780,853.98
D. $1,745,503.92