IE REFRESHER 2

Harvard Company purchased equipment having an invoice price of $11,500. The terms of sale were 2/10, n/30, and Harvard paid within the discount period. In addition, Harvard paid a $160 delivery charge, $185 installation charge, and $931 sales tax. The amount recorded as the cost of this equipment is: a. $11,845 b. $12,776 c. $11,615 d. $12,546

$12,546

A product is currently made in a process-focused shop, where fixed costs are $9,000 per year and variable cost is $50 per unit. In reference to the previous problem, what is the profit (or loss) on a demand of 200 units per year? a. $20,000.00 b. $21,100.00 c. $21,000.00 d. $23,100.00

$21,000.00

A product sells for $5, and has unit variable costs of $3. This product accounts for $20,000 in annual sales, out of the firm's total of $60,000. The weighted contribution of this product is approximately a. 0.133 b. 0.200 c. 0.40 d. 0.667

0.133

A businessman invests in a medium scale business which cost him P57,000. The net annual return is estimated at P14,000 for each of the next 8 years. Compute for the benefit-cost ratio if the annual rate of interest is 18%. a. 1.00 b. 0.99 c. 1.12 d. 0.92

1.00

Compute the benefit ratio of the following project: Project cost = Php 80,000 Gross income = Php 30,000 per year Operating cost = Php 6,000 per year The life of project is 8 years. Money is worth 8%. a. 1.72 b. 1.36 c. 1.59 d. 1.68

1.72

During the current year, Carl Equipment Stores had net sales of $600 million, a cost of goods sold of $500 million, average accounts receivable of $75 million, and average inventory of $50 million. Carl Equipment 's inventory turnover rate is: a. 6.7 times b. 10 times c. 12 times d. 1.2 times

10 times

When will an amount be tripled with an interest rate of 11.56%? a. 12 yrs. b. 11 yrs. c. 10 yrs. d. 9 yrs.

10 yrs.

Given an actual demand of 103, a previous forecast value of 99, and an alpha of .4, the exponential smoothing forecast for the next period would be a. 94.6 b. 97.4 c. 100.6 d. 101.6

100.6

A product has a market estimate of 98,000 components and requires the processing steps: turning, milling, and drilling, having defective estimates of 4%, 2%, and 3%. The market estimate is the output required from step 3. How many units are required to meet the market estimate? a. 108,733 units b. 108,734 units c. 107,388 units d. 107,389 units

107,389 units

A certain printing machine uses a particular die cutter that costs $1,350 per year. The procurement department estimated that the ordering costs is at $25, and holds this inventory at an annual storage cost of 15% of the purchase price per unit. If the annual demand for this die cutter is 30 units, determine the optimal number of units to order. a. 13 units b. 12 units c. 16 units d. 15 units

15 units

If you want to receive a 7% inflation-free return on your investment and you expect inflation to be 9% per year, what actual interest rate must you earn? a. 16% b. -2% c. 1% d. 9%

16%

In 1980, a couple invested Php 10,000 for 5 years at the rate of 16% annually. During that time the rate of inflation is 5% compounded annually. How much money will he gave in 1985 and how much profit is realized over the 5 years? a. 14,274.54 ; 4,274.54 b. 16,456.73 ; 6,456.73 c. 12,384.78 ; 2,384.78 d. 10,364.22 ; 364.22

16,456.73 ; 6,456.73

The new office supply discounter, Paper Clips, Etc. (PCE), sells a certain type of ergonomically correct office chair which costs $300. The annual holding cost rate is 40%, annual demand is 900, and the order cost is $20 per order. The lead time is 4 days. Because demand is variable (standard deviation of daily demand is 2.4chairs), PCE has decided to establish a customer service level of 90%. The store is open 300 days per year. What is the reorder point? a. 15 b. 18 c. 13 d. 20

18

A business loan 100,000 for 5 years, what is the ideal payment plan if interest is 12% compounded monthly? a. 2,424 b. 2,688 c. 2,224 d. 2,868

2,224

John's House of Pancakes uses a weighted moving average method to forecast pancake sales. It assigns a weight of 5 to the previous month's demand, 3 to demand two months ago, and 1 to demand three months ago. If sales amounted to 1000 pancakes in May, 2200 pancakes in June, and 3000 pancakes in July, what should be the forecast for August? a. 2400 b. 2511 c. 2067 d. 3767

2511

EQUALIZER ACCOUNTING SERVICES, provides low-cost tax advice and preparation of financial statements to those in need. In the beginning of the period, Assets = 18,000, Liabilities = $15,000. At the end of the current period, the company reports the following amounts: Revenues = $27,000, Expenses = $33,000. The stockholders' equity at the end of the period is: a. (P3,000) b. 3,000 c. (6,000) d. 6,000

3,000

The last four months of sales were 8, 10, 15, and 9 units. The last four forecasts were 5, 6, 11, and 12 units. The Mean Absolute Deviation (MAD) is a. 2 b. -10 c. 3.5 d. 9

3.5

A machine has an initial cost of P50,000 and a salvage value of P10,000 after 10 years. What is the book value after five years using straight line depreciation method? a. 35,000 b. 25,000 c. 15,500 d. 30,000

30,000

A subcontractor produces a component for solar panels. The daily demand for this part is 2,200 units per day. The annual inventory carrying cost is 25% of the unit price and the cost of preparing an order and making production setup for the order is P325,000. The company operates 250 days per year. The machine used to manufacture this part has a production rate of 5,500 units per day and the price of the component is at P1,900. Calculate the optimum lot size. a. 35,418 units b. 35,518 units c. 34,158 units d. 31,458 units

35,418 units

A machine shop installs new lathe machine that costs of P1,800,000. The machine shop expects annual gross revenue to increase P500,000 while it incurs an annual expense of P50,000 for the machine operations and maintenance. What is the payback period? a. 4 yrs. b. 3 yrs. c. 5 yrs. d. 2 yrs.

4 yrs.

A time series trend equation is 25.3 + 2.1 X. What is your forecast for period 7? a. 23.2 b. 25.3 c. 27.4 d. 40.0

40.0

On retirement, a workman finds that his company pension calls for payment of Php 300 to him at the beginning of each month for 20 years. Find the present value of this pension at 5% compounded monthly. a. 45,631.87 b. 54,321.42 c. 53,361.26 d. 46,432.42

45,631.87

A machine which cost Php 10,000 was sold as scrap after being used for 10 years. If the scrap value was Php 500, determine the total depreciation and book value at the end of the 5th year. a. 4750; 5250 b. 3650; 6350 c. 5050; 4950 d. 6250; 3750

4750; 5250

The gasoline cost P17.50 per liter. The inflation rate is predicted to be 13%. How many years to reach the cost of P50 per liter? a. 50 = 17.50 (1 + 0.13)n b. 50 = 17.50 [1 + 0.13(n)] c. 50 = 17.5 (1 - 0.13)n d. insufficient information

50 = 17.50 (1 + 0.13)n

A machine cost P7,350 has a life of 8 years and has a salvage value of P350 at the end of 8 years. Determine its book value at the end of 1 year using Constant Percentage or Declining Balance Method. a. P2534.13 b. P4332.42 c. 5023.54 d. 2533.86

5023.54

Given an actual demand of 61, a previous forecast of 58, and an α of .3, what would the forecast for the next period be using simple exponential smoothing? a. 45.5 b. 57.1 c. 58.9 d. 61.0

58.9

A production line is to be designed for a job with four tasks. The task times are 2.4 minutes, 1.4 minutes, 0.9 minutes, and 1.7 minutes. The maximum cycle time is ______ and the minimum cycle time is ______ minutes. a. 1.8; 1.4 b. 1.6; 0.9 c. 6.4; 2.4 d. 2.4; 0.9

6.4; 2.4

A product is currently made in a process-focused shop, where fixed costs are $9,000 per year and variable cost is $50 per unit. The firm sells the product for $200 per unit. What is the break-even point for this operation? a. 65 units b. 60 units c. 50 units d. 62 units

60 units

15. What is the present worth of a 3-year annuity paying P3,000 at the end of each year with interest at 8% compounded annually? a. 7731.29 b. 9731.79 c. 7371.29 d. 9371.79

7731.29

A machine has a first cost of P800,000 and a salvage value of P50,000 at the end of its life after 10 years. The annual savings for the use of the machine amounts to P124,900.97. If the annual maintenance cost of machine is P4,000 and the sinking fund to recover depreciation earns 6%, compute the rate of return of investment. a. 8% b. 7% c. 6% d. 9%

8%

The production of MacLaren's Beverage, a local fresh juice manufacturer, uses reusable bottles, in which they produce their five varieties of drinks at 500 liters each per day. The lead time to order the bottles is at 5 days with a standard deviation of 2 days. With a 95% desired service level, MacLaren's Beverage wants to calculate the safety stock needed for their production. a. 8,525 bottles b. 8,255 bottles c. 8,345 bottles d. 8,225 bottles

8,225 bottles

An assembly line consists of 158 tasks grouped into 32 workstations. The sum of all task times is 105 minutes. Cycle time for the line is 4 minutes. The efficiency of this line is approximately a. 78 percent b. 71 percent c. 82 percent d. 91 percent

82 percent

An executive conference center has the physical ability to handle 1,100 participants. However, conference management personnel believe that only 1,000 participants can be handled effectively for most events. The last event, although forecasted to have 1,000 participants, resulted in the attendance of only 950 participants. What are the utilization and efficiency of the conference facility? a. 86 .6%, 95% respectively b. 86 .4%, 95% respectively c. 86 .8%, 97% respectively d. 86 .9%, 97% respectively

86 .4%, 95% respectively

Engr. Sison borrows P100,000 at 10% effective annual interest. He must pay back the loan over 30 years with uniform monthly payments due on the first day of each month. What does Engr. Sison pay each month? a. 879 b. 897 c. 978 d. 789

879

The staff training center at a large regional hospital provides training sessions in CPR to all employees. Assume that the capacity of this training system was designed to be 1800 employees per year. Since the training center was first put in use, the program has become more complex, so that 1400 now represents the most employees that can be trained per year. In the past year, 1350 employees were trained. Calculate the efficiency. a. 96.4% b. 95.4% c. 90.2% d. 99.9%

96.4%

In the Office Relationship Chart, which rating reflects the highest importance for two departments' closeness to each other? a. A b. E c. I d. O

A

In a cash flow series: a. Uniform gradient signifies that an income or disbursement changes by the same amount in each interest period b. Either an increase or decrease in the amount of a cash flow is called the gradient c. The gradient in the cash flow may be positive or negative d. All of these

All of these

In a cash-flow diagram: a. Time 0 is considered to be the present b. Time 1 is considered to be the end of time period 1 c. A vertical arrow pointing up indicates a positive cash flow d. All of these

All of these

Pick up the correct statement from the following: a. The change in the amount of money over a given time period is called 'time value' of money, a most important concept in engineering economy b. The manifestation of the time value of money is termed as interest c. Interest on borrowing = present amount owed - original loan d. All of these

All of these

Two alternatives A and B are being considered. Initial cost of A is P600,000 while that B is P900,000. A has a high operating cost of P12,000 annually and a short life of 4 years. While B has a lower operating cost of P9,000 annually but can be kept for 8 years. Both salvage value is negligible. Rate of return is 6%. Determine which alternative is better using AWC method. a. Alternative A b. Alternative B c. Both alternative d. None of the above

Alternative B

If a seller recovers his capital along with accumulated compensating interest not in one single lump-sum payment but in periodical equal payments, over time: a. Capital Recovery Annuity is availed b. Present Worth Annuity is availed c. Sinking Fund Annuity is availed d. Future Worth Annuity is availed

Capital Recovery Annuity is availed

Chan Company uses a perpetual inventory system. All of its sales are made on account. The company sells goods costing $3,000 at a sales price of $4,300. In recording this transaction, Chan will make all of the following entries except: a. Credit Sales, $4,300. b. Credit Inventory, $4,300. c. Debit Cost of Goods Sold, $3,000. d. Debit Accounts Receivable, $4,300.

Credit Inventory, $4,300.

Which of the following journal entries is required to close the Income Summary account of a profitable company? a. Debit Income Summary, credit Retained earnings. b. Credit Income Summary, debit Retained earnings. c. Debit Income Summary, credit Share Capital. d. Credit Income Summary, debit Share Capital.

Debit Income Summary, credit Retained earnings.

On June 1, 2009, Jensen Company acquired an 8%, ten-month note receivable from a customer in settlement of an existing account receivable of $130,000. Interest and principal are due at maturity. The proper adjusting entry at December 31, 2009, with regard to this note receivable includes a: a. Debit to Cash of $6,067 b. Debit to Notes Receivable of $10,400. c. Credit to Interest Revenue of $10,400. d. Debit to Accrued Interest Receivable of $6,067.

Debit to Accrued Interest Receivable of $6,067.

Which of the following accounts would never be reported in the income statement as an expense? a. Depreciation expense b. Income taxes expense c. Interest expense d. Dividend's expense

Dividend's expense

The interest calculated on the basis of 365 days a year, is known as: a. Interest b. Ordinary simple interest c. Exact simple interest d. None of these

Exact simple interest

Fisher Corporation invested $320,000 cash in available-for-sale securities in early December. On December 31, the quoted market price for these securities is $337,000. Which of the following statements is correct? a. Fisher's December income statement includes a $17,000 gain on investments. b. If Fisher sells these investments on January 2 for $300,000, it will report a loss of $37,000. c. Fisher's December 31 balance sheet reports investments in securities at $320,000 and a gain on Fair Value Changes on investments of $17,000. d. Fisher's December 31 balance sheet reports investments in securities at $337,000 and a gain on Fair Value Changes on investments of $17,000

Fisher's December 31 balance sheet reports investments in securities at $337,000 and a gain on Fair Value Changes on investments of $17,000

"Under conditions of perfect competition, the price at which any given product will be supplied and purchased is the price that will result in the supply and the demand being equal." This statement is known as the: a. Law of diminishing return b. Law of supply c. Law of demand d. Law of supply and demand

Law of supply and demand

A man planned of building a house. The cost of construction is P800,000 while annual maintenance cost is estimated at P15,000. If the interest rate is 6%, what is the capitalized cost of the house? a. P1,050,000 b. P1,500,000 c. P1,005,000 d. P1,000,500

P1,050,000

A machine costs P70,000 and an estimated life of 10 years with a salvage value of P500. What is its book value after 7 years using straight line method? a. P21,350 b. P25,350 c. P26,350 d. P27,350

P21,350

A scientific calculator has a selling price of P850. If its selling price is expected to decline at rate of 10% per annum due to obsolescence, what will be its selling price after 5 years? a. P401.92 b. P501.92 c. P601.92 d. P701.92

P501.92

An asset is purchased for P50,000. Its estimated life is 10 years after which it will be sold for P12,000. Find the depreciation for the first year using sum of years digit method. a. P6,099.10 b. P9,960.10 c. P9,690.10 d. P6,909.10

P6,909.10

In the purchase of a rice cooker, a buyer pays Php 200 cash. He will discharge the balance, principal and interest included at 18% payable monthly on the unpaid balance, by payments of Php 75 at the end of each month for a year. Find the cash value of the rice cooker. a. Php 1,018.06 b. Php 2,124.26 c. Php 1,521.60 d. Php 1800.00

Php 1,018.06

The first cost of a certain equipment is Php 324,000 and a salvage value of Php 50,000 at the end of its life of 4 years. If money is worth 6% compounded annually, find the capitalized cost. a. Php 1,367,901.15 b. Php 1,427,846.17 c. Php 936,431.16 d. Php 843,916.27

Php 1,367,901.15

A firm considering the installation of an automatic data processing unit to handle some of its accounting operations. Machines for that purpose may be purchased for Php 20,000, or maybe leased for Php 8,000 for the first year and Php 1,000 less every year now and then until the end of the 4th year. If money is worth 15%, is it advisable to rent or buy the machine? a. Php 19,054 b. Php 20,020 c. Php 21,021 d. Php 19,980

Php 19,054

A business loaned Php 100,000 for 5 years, what is the ideal payment plan if interest is 12% compounded monthly? a. Php 2,424 b. Php 2,688 c. Php 2,224 d. Php 2,868

Php 2,224

Given that the discount rate is 11.5%, what is the equivalent uniform annual cash flow of the following stream of cash flows? Year 0 - Php 100,000 Year 1 - Php 200,000 Year 2 - Php 300,000 Year 3 - Php 135,000 a. Php 230,437.00 b. Php 255,124.24 c. Php 250,005.25 d. Php 525,421.20

Php 255,124.24

Based on the previous problem, what is the break-even point? a. Php 300,000 b. Php 299,000 c. Php 295,000 d. Php 301,000

Php 295,000

Compute the uninflated present worth of Php 5,000 in three years if the average inflation rate is 6% and nominal rate of interest is 10%? a. Php 3,154.09 b. Php 4,167.64 c. Php 2,968.42 d. Php 3,162.48

Php 3,154.09

If interest is at the rate of 8% compounded semi-annually, what sum must be invested at the end of each 6 months to accumulate a fund of Php 10,000 at the end of 8 yrs? a. Php 458.20 b. Php 532.11 c. Php 498.23 d. Php 753.10

Php 458.20

A factory engaged in the fabrication of an automobile part with a production capacity of 700,000 units per year is only operating at 62% of capacity due to unavailability of the necessary foreign currency to finance the importation of their raw materials. The annual income is Php 430,000. Annual fixed cost is Php 190,000 and variable cost is Php 0.348 per unit. What is the current profit or loss? a. Php 88,968 profit b. Php 88,999 loss c. Php 90,950 profit d. Php 91,850 loss

Php 88,968 profit

A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs 0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit. If demand is expected to be 10 million units, which plant offers the lowest total cost? a. Plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units b. Plant B, because it is cheaper than Plant A for all volumes over 8,000,000 units c. Plant A, because it is cheaper than Plant B for all volumes d. Plant B, because it has the lower variable cost per unit

Plant B, because it is cheaper than Plant A for all volumes over 8,000,000 units

A proposed manufacturing plant will require a fixed capital investment of P6M and an estimated working capitaL of P1M. Annual depreciation is estimated to be 5% of the fixed capital investment. If the annual profit is P3M, determine the rate of return on the total investment and the minimum payback period. a. ROR = 38.57%; Payback Period = 2.33 years b. ROR = 28.75%; Payback Period = 3.23 years c. ROR = 35.57%; Payback Period = 3.33 years d. ROR = 25.77%; Payback Period = 2.22 years

ROR = 38.57%; Payback Period = 2.33 years

If 'S' is the future capital accumulated in 'n' years at the rate of interest 'I' per annum, then present worth is: a. S/(1 + i)^n c. S (1 + i)^1/n b. S (1 + i)^n d. None of these

S/(1 + i)^n

The change in the amount of money over a given time period is called the _________________; it is the most important concept in engineering economy. a. Income tax b. Time value of money c. Interest income d. None of the above

Time value of money

The components, their description, and the quantity of each required to make one unit of a product are documented on a. a group technology listing b. a route sheet c. a bill of materials d. an engineering drawing

a bill of materials

Which of the following is not an information requirement for solving a load-distance problem? a. a list of departments or work centers b. a projection of work flows between the work centers c. the distance between locations d. a list of product cycle times

a list of product cycle times

The fundamental difference between cycles and seasonality is the a. duration of the repeating patterns b. magnitude of the variation c. ability to attribute the pattern to a cause d. all of the above

duration of the repeating patterns

Group technology requires that a. each component be identified by a coding scheme that specifies the type of processing and the parameters of the processing b. a specific series of engineering drawings be prepared c. all bills of material be prepared using the same format d. engineering change notices be linked to each of the bills of material and engineering notices

each component be identified by a coding scheme that specifies the type of processing and the parameters of the processing

Which of the following is true for process layouts, but false for product-oriented layouts? a. low in-process inventories b. flexibility in equipment and labor assignments c. low variety of products d. high volume of output

flexibility in equipment and labor assignments

Net present value a. is gross domestic product less depreciation b. is sales volume less sales and excise taxes c. is profit after taxes d. is the discounted value of a series of future cash receipts

is the discounted value of a series of future cash receipts

Governmental attitudes toward issues such as private property, intellectual property, zoning, pollution, and employment stability may change over time. The term associated with this phenomenon is a. bureaucratic risk b. political risk c. legislative risk d. judicial risk

judicial risk

14. A capacity alternative has an initial cost of $50,000 and cash flow of $20,000 for each of the next four years. If the cost of capital is 5 percent, the net present value of this investment is a. greater than $80,000 b. greater than $130,000 c. less than $30,000 d. impossible to calculate, because no interest rate is given

less than $30,000

An assembly drawing a. shows, in schematic form, how the product is assembled b. shows an exploded view of the product c. lists the operations, including assembly and inspection, necessary to produce the component with the material specified in the bill of material d. provides detailed instructions on how to perform a given task

lists the operations, including assembly and inspection, necessary to produce the component with the material specified in the bill of material

In assembly line balancing, cycle time (the ratio of available production time to scheduled production) is the a. minimum time that a product is allowed at each workstation b. maximum time that a product is allowed at each workstation c. optimum time that a product is allowed at each workstation d. desired cycle time that a product is allowed at each workstation

maximum time that a product is allowed at each workstation

The typical goal used when developing a process-oriented layout strategy is to a. minimize the distance between adjacent departments b. minimize the material handling costs c. maximize the number of different tasks which can be performed by an individual machine d. minimize the level of operator skill necessary

minimize the distance between adjacent departments

A production line is to be designed for a product whose completion requires 21 minutes of work. The factory works 400 minutes per day. Can an assembly line with five workstations make 100 units per day? a. yes, with exactly 100 minutes to spare b. no, but four workstations would be sufficient c. no, it will fall short even with a perfectly balanced line d. yes, but the line's efficiency is very low

no, it will fall short even with a perfectly balanced line

Which of the following constitutes a major trend influencing office layouts? a. downsizing b. globalization c. environmental issues d. off-site employees

off-site employees

Which of the following is not present in a time series? a. seasonality b. operational variations c. trend d. cycles

operational variations

In time series, which of the following cannot be predicted? a. large increases in demand b. technological trends c. seasonal fluctuations d. random fluctuations

random fluctuations

An assembly charts a. shows graphically how the product is assembled b. shows an exploded view of the product c. lists the operations, including assembly and inspection, necessary to produce the component with the material specified in the bill of material d. provides detailed instructions on how to perform a given task

shows graphically how the product is assembled

When decision trees are used to analyze capacity decisions, a. "do nothing" is not a possible decision alternative b. probabilities must be assigned to each of the decision alternatives c. states of nature are often demand-based, as in "market favorability" d. states of nature must be known with certainty

states of nature are often demand-based, as in "market favorability"

The center-of-gravity method does not take into consideration the a. location of markets b. volume of goods shipped to the markets c. value of the goods shipped d. combination of volume and distance

value of the goods shipped

Balancing low-cost storage with low-cost material handling is important in a(n) a. fixed-position layout b. process-oriented layout c. office layout d. warehouse layout

warehouse layout