ACC 650 ACC650 Module 8 Quiz Answers (Grand Canyon University)

ACC 650 ACC650 Module 8 Quiz Answers (Grand Canyon University)


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ACC 650 Module 8 Quiz Review Using Accounting Information in Decision Making (GRAND CANYON)


1) The following data pertain to Lemon Enterprises:

a. Variable manufacturing cost: $70

b. Variable selling and administrative cost: 20

c. Applied fixed manufacturing cost: 40

d. Allocated fixed selling and administrative cost: 15

e. What price will the company charge if the firm uses cost-plus pricing based onvariable manufacturing cost and a markup percentage of 110%?

2) Which of the following represents the cost-plus pricing formula?

3) Which of the following is the proper calculation of a company's depreciation tax shield?

4) The net-present-value method assumes that project funds are reinvested at the:

5) In a net-present-value analysis, the discount rate is often called the:

6) The term "opportunity cost" is best defined as:

7) Discounted-cash-flow analysis focuses primarily on:

8) From an economic perspective, a company's profit-maximizing quantity is found where:

9) Jenkins plans to generate $650,000 of sales revenue if a capital project is implemented. Assuming a 30% tax rate, the sales revenue should be reflected in the analysis by a:

10) Susan is contemplating a job offer with an advertising agency where she will make $54,000 in her first year of employment. Alternatively, Susan can begin to work in her father's business where she will earn an annual salary of $38,000. If Susan decides to work with her father, the opportunity cost would be:

11) Occular is studying whether to drop a product because of ongoing losses. Costs that would be relevant in this situation would include variable manufacturing costs as well as:

12) Which of the following best defines the concept of a relevant cost?

13) Which of the following costs can be ignored when making a decision?

14) If the volume sold reacts strongly to changes in price, demand:

15) Capital budgeting tends to focus primarily on:

16) A company that is using the internal rate of return (IRR) to evaluate projects should accept a project if the IRR:

17) The following costs relate to Southside Company: Variable manufacturing cost, $30; variable selling and administrative cost, $8; applied fixed manufacturing overhead, $15; and allocated fixed selling and administrative cost, $4. If Southside uses absorption manufacturing-cost pricing formulas, the company's markup percentage would be computed on the basis of:

18) Consider the following statements about the total-cost and the incremental-cost approaches of investment evaluation:

I. Both approaches will yield the same conclusions.

II. Choosing between these approaches is a matter of personal preference.

III. The incremental approach focuses on cost differences between alternatives.

Which of the above statements is (are) true?

19) S'Round Sound, Inc. reported the following results from the sale of 24,000 units of IT-54:

Sales    $528,000

Variable manufacturing costs 288,000

Fixed manufacturing costs      120,000

Variable selling costs  52,800

Fixed administrative costs      35,200

Rhythm Company has offered to purchase 3,000 IT-54s at $16 each. Sound has available capacity, and the president is in favor of accepting the order. She feels it would be profitable because no variable selling costs will be incurred. The plant manager is opposed because the "full cost" of production is $17. Which of the following correctly notes the change in income if the special order is accepted?

20) Algeria Transport Company has average invested capital of $800,000 and a target return on investment of 15%. The total cost per unit is $20 based on a volume level of 25,000 units. Albany's markup percentage on total cost is:

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