Quiz 7 Cost Accounting

1450 WordsNov 1, 20136 Pages
Name: ________________________ Class: ___________________ Date: __________ Quiz 7 1) Which of the following involves significant financial investments in projects to develop new products, expand production capacity, or remodel current production facilities? A) capital budgeting B) working capital C) master budgeting D) project-cost budgeting Answer: A Diff: 1 Terms: capital budgeting Objective: 1 AACSB: Reflective thinking 2) The two factors capital budgeting emphasizes are: A) qualitative and nonfinancial B) quantitative and nonfinancial C) quantitative and financial D) qualitative and financial Answer: C Diff: 1 Terms: capital budgeting Objective: 2 AACSB: Reflective thinking 3) The stage…show more content…
What is the internal rate of return? A) 15% B) 16% C) 17% D) 18% Answer: B Explanation: B) $921,250 = $250,000F F = 3.685 Chart criteria for six years is 3.685 = 16% Diff: 3 Terms: internal rate-of-return (IRR) method, required rate of return (RRR) Objective: 2 AACSB: Analytical skills 10) Investment A requires a net investment of $1,600,000. The required rate of return is 12% for the four-year annuity. What are the annual cash inflows if the net present value equals 0? (rounded) A) $378,966 B) $526,836 C) $549,696 D) $591,466 Answer: B Explanation: B) 3.037 × ACI - $1,600,000 = $0 = $526,836 Diff: 3 Terms: net present value (NPV) method, internal rate-of-return (IRR) method Objective: 2 AACSB: Analytical skills 11) The degree of freedom to make decisions is: A) decentralization B) autonomy C) centralization D) motivation Answer: B Diff: 1 Terms: autonomy Objective: 1 AACSB: Reflective thinking Answer the following questions using the information below: Penn Oil Corporation has two divisions, Refining and Production. The company 's primary product is Luboil Oil. Each division 's costs are provided below: Production: Variable costs per barrel of oil $ 9 Fixed costs per barrel of oil $ 6 Refining: Variable costs per barrel of oil $30 Fixed costs per barrel of oil $36 The Refining Division has been operating at a capacity of 40,000 barrels a day

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