Accounting II exam 3 final exam review
toms tool factory is an investment center and is responsible for all of its net income and the use of its assets. This year, the invested assets totaled $475,000, and ner income was $275,000. The return on investment (ROI) (rounded to one decimal place)
57.9%
which of the following is a disadvantage of decentralization
each decentralized 9peration purchases its own assets and pays for operating costs
the average rate of return is a measure of profitability computed by dividing the average annual cash inflows from an asset by the average amount invested in the asset
false
periods in time that have experienced increasing price levels are known as periods of
inflation
lean manufacturing philosophy reduces which of the following?
inventory, setup time, and lead time
the ratio of sales to invested assets, which is also a factor in the Dupont formula for determining the return on investment (ROI) is called
investment turnover
which of the following transfer price approaches is used when the transfer price is set at the amount sold fo outside buyers
market price
determining the transfer price at which the product or service transferred could be sold to outside buyers is known as the
market price approach
which of the following is considered a non-value added lead time?
moving from process to process
which of the following methods for evaluating capital investment proposals reduces the expected future net cash flow originating from the proposals to their present values and computes a net present value?
net present value
which of the following are present value methods of analyzing capital investment proposals?
net present value and internal rate of return
which of the following is often referred to as the discounted cash flow method?
net present value method
which of the following would be the most appropriate cost driver allocating the service department costs of the information systems department
number of computers
the revenue that us forgone from an alternative use of an asset, such as cash, is called
opportunity cost
which of the following can be used to place capital investment proposals involving different amounts of investment kn a comparable basis for purposes of net present value analysis
present value index
a point in the manufacturing process where the demand for the company's product exceeds the ability to produce the product is called
production bottleneck
which of the following are measures that management can use in evaluating and controlling investment center performance?
residual income, rate of return on investment (ROI), and operating income
businesses that are separated into teo or more manageable units in which managers have authority and responsibility for operations are said to be
consolidated
which of the following provisions of the internal revenue code can be used to reduce the amount of the income tax expense arising from capital investment projects
depreciation deduction
when using the product cost method of applying the cost-plus approach to product pricing, which of the following is included in the markup?
desired profit
Mason corporation had $650,000 in invested assets, sales of $700,000, operating income amounting to $99,000, and a desired minimum return on investment of 15% the investment turnover (rounded to two decimal places) for Mason corporation is
1.08
Heidi company is considering the acquisition of a machine that costs $420,000. the machine is expected to have a useful life of 6 years, a negligible residual value, an annual net cash inflow of $120,000, and annual operating income of $83,721. the estimated cash payback period for the machine is
3.5 years
which of the following is a disadvantage of decentralization
Decisions made by one manager may negatively affect the profitability of the entire company.
which of the following statements best describes a decentralized company?
Each of many units is responsible for its own operations and decision making.
how are the objectives of lean manufacturing achieved?
all of these choices
which of the following is an example of a nonfinancial measure of performance used in lean manufacturing?
all of these choices
which of the following is a measure of performance for the manager of an investment center?
all of these choices (divisional income statements, return on investment (ROI), residual income)
the formula for determining the present value factor for an annuity of $1 is
amount to be invested ÷ equal annual net cash flows
the ___ method of analyzing capital investment proposals divides the estimated average annual income by the average investment
average rate of return
which of the following can be determined by dividing the initial cost by the annual net cash inflow of an investment
cash payback period
which of the following combines market-based pricing with a cost-reduction emphasis
target costing
which of the following is a method commonly used in applying the cost-plus approach to product pricing?
total cost method
the prwsent value index is computed using which ofbthe following formulas?
total present value of net cash flow ÷ amount to be invested
discounting a product or segment is a huge decision that myt be carefully analyzed. which of the following would be a valid reason to continue an operation
variable costs are less than revenues