Exam 3 acct
The expected period of time that will elapse between the date of a capital investment and the complete recovery in cash of the amount invested is called the discount period.
TRUE
A company is considering the purchase of a new piece of equipment for $90,000. Predicted annual net cash inflows from the investment are $36,000 (Year 1), $30,000 (Year 2), $18,000 (Year 3), $12,000 (Year 4), and $6,000 (Year 5). The average income from operations over the 5-year life is $20,400. The payback period is 3.5 years.
True
The relationship of each asset item as a percent of total assets is an example of vertical analysis.
True
Activity rates are determined by a. dividing the cost budgeted for each activity pool by the estimated activity base for that pool. b. dividing the cost budgeted for each activity pool by the actual activity base in that pool. c. dividing the actual cost for each activity pool by the estimated activity base for that pool. d. dividing the actual cost for each activity pool by the actual activity base for that pool.
a)
Which of the following is not a characteristic evaluated in ratio analysis? marketability profitability solvency liquidity
a0
Calculate the total factory overhead to be charged to Nooks. a. $300,000 b. $488,000 c. $600,000 d. $400,000
b)
The cash payback period for this investment is a. 4 years b. 3 years c. 5 years d. 2 years
b)
The production department is proposing the purchase of an automatic insertion machine. It has identified 3 machines and has asked the accountant to analyze them to determine the best cash payback.
b)
Determine the activity rate for product development per change. a. $73,000 b. $16,222 c. $8,588 d. $30,417
on chegg
Determine the activity-based cost for each disk drive unit. a. $130.69 b. $394.12 c. $279.57 d. $92.25
on chegg
A decrease in the ratio of liabilities to stockholders' equity indicates an improvement in the margin of safety for creditors.
true
Unusual items affecting the prior period's income statement consist of changes in or errors in applying accounting principles.
true
When a plantwide factory overhead rate is used, overhead costs are applied to all products by a single rate.
true
A company with working capital of $720,000 and a current ratio of 2.2 pays a $125,000 short-term liability. The amount of working capital immediately after payment is a. $845,000. b. $125,000. c. $595,000. d. $720,000.
c)
Calculate the overhead per unit to be charged to small lamps. a. $17.50 b. $39.17 c. $75.00 d. $38.33
c)
Determine the activity rate for materials handling per move. a. $58.82 b. $50.00 c. $80.65 d. $20.83
c)
Determine the activity rate per production order for scheduling. a. $10.42 b. $29.41 c. $200.00 d. $20.00
c)
The average rate of return for this investment is a. 18% b. 10% c. 16% d. 58%
c)
etermine the activity-based cost for each wire drive unit. a. $204.13 b. $173.51 c. $394.12 d. $744.06
d)
Assume the following sales data for a company: Current year $325,000 Preceding year $250,000 What is the percentage increase in sales from the preceding year to the current year? 76.9% 70% 50% 30%
d) 325-250=75 75/250=0.3
A single plantwide overhead rate method is very expensive to apply.
false
The cash payback period for this investment is a. 4 years b. 20 years c. 3 years d. 5 years
c)
The independent auditor's report a. describes which financial statements are covered by the audit. b. states that the financial statements were presented on time. c. gives the auditor's opinion regarding the fairness of the financial statements. d. summarizes what the auditor did.
c)
The net present value for this investment is a. $55,200 b. $36,400 c. $(16,170) d. $(126,800)
c)
The percent of fixed assets to total assets is an example of a. solvency analysis. b. profitability analysis. c. vertical analysis. d. horizontal analysis.
c)
A loss on disposal of a segment would be reported in the income statement as a(n) a. administrative expense. b. selling expense. c. other expense. d. deduction from income from continuing operations.
d)
Common allocation bases are a. direct labor dollars, direct labor hours, direct material dollars b. machine dollars, direct labor dollars, direct labor hours c. direct labor dollars, direct labor hours, machine dollars d. direct labor dollars, direct labor hours, machine hours
d)
Average rate of return equals average investment divided by estimated average annual income.
false
Use of a plantwide factory overhead rate assumes that the activities causing overhead costs are different across different departments and products.
false
Using vertical analysis of the income statement, a company's net income as a percentage of sales is 15%; therefore, the cost of goods sold as a percentage of sales must be 85%.
false
Calculate the plantwide factory overhead rate for Adirondack Marketing Inc. a. $0.07 per dlh b. $14.77 per dlh c. $25.00 per dlh d. $ 6.25 per dlh
a)
Calculate the total factory overhead to be charged to each unit of Hooks. a. $33 b. $61 c. $50 d. $11
a)
Given the following information, determine the activity rate for setups. a. $18.00 b. $58.00 c. $.75 d. $5.09
a)
Question Content Area The methods of evaluating capital investment proposals can be grouped into two general categories that can be referred to as (1) methods that ignore present value and (2) present value methods.
false
The anticipated purchase of a fixed asset for $400,000, with a useful life of 5 years and no residual value, is expected to yield total net income of $200,000 for the 5 years. The expected average rate of return on investment is 25.0%.
false
The anticipated purchase of a fixed asset for $400,000, with a useful life of 5 years and no residual value, is expected to yield total net income of $300,000 for the 5 years. The expected average rate of return is 30%.
false
The average rate of return method of capital investment analysis gives consideration to the present value of future cash flows.
false
The excess of the cash flowing in from revenues over the cash flowing out for expenses is termed net discounted cash flow.
false
Unusual items affecting the current period's income statement consist of changes in accounting principles and discontinued operations.
false
Zorn Co. budgeted $600,000 of factory overhead cost for the coming year. Its plantwide allocation base, machine hours, is budgeted at 100,000 hours. Budgeted units to be produced are 200,000 units. Zorn's plantwide factory overhead rate is $6.00 per unit.
false
Determine the activity-based cost for each tape drive unit. a. $232.69 b. $97.73 c. $394.12 d. $103.84
on chegg
A company is considering the purchase of a new machine for $48,000. Management expects that the machine can produce sales of $16,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $8,000 per year plus depreciation of $4,000 per year. All revenues and expenses except depreciation are on a cash basis. The payback period for the machine is 12 years.
true
A present value index can be used to rank competing capital investment proposals when the net present value method is used.
true
A series of equal cash flows at fixed intervals is termed an annuity.
true
Activity cost pools are cost accumulations associated with a given activity.
true
Activity-based costing is much easier to apply than single plantwide factory overhead allocation.
true
Bob's Biscuit Corporation budgeted $1,200,000 of factory overhead cost for the coming year. Its plantwide allocation base, machine hours, is budgeted at 100,000 hours. Budgeted units to be produced are 200,000 units. Bob's plantwide factory overhead rate is $12.00 per machine hour.
true
Care must be taken involving capital investment decisions, since normally a long-term commitment of funds is involved and operations could be affected for many years.
true
Comparing dividends per share to earnings per share indicates the extent to which the corporation is retaining its earnings for use in operations.
true
Current position analysis is used by short-term creditors to assess how quickly they will be repaid.
true
Dollar amounts of working capital are difficult to assess when comparing companies of different sizes or in comparing such amounts with industry figures.
true
Factors that reflect the ability of a business to pay its debts and earn a reasonable amount of income are referred to as solvency, profitability, and liquidity.`
true
If a proposed expenditure of $80,000 for a fixed asset with a 4-year life has an annual expected net cash flow and net income of $32,000 and $12,000, respectively, the cash payback period is 4 years.
true
If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours is 80,000, and the actual direct labor hours is 6,700 for the month, the amount of factory overhead to be allocated is $38,525 (if the allocation is based on direct labor hours).
true
Question Content Area If the activities causing overhead costs are different across different departments and products, use of a plantwide factory overhead rate will cause distorted product costs.
true
Question Content Area Multiple production department factory overhead rates are most useful when production departments significantly differ in their manufacturing processes.
true
The method of analyzing capital investment proposals in which the estimated average annual income is divided by the average investment is the average rate of return method.
true
The number of days' sales in inventory is one means of expressing the relationship between the cost of goods sold and inventory.
true
The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called capital investment analysis.
true
The selection of the factory overhead allocation method is important because the method selected determines the accuracy of the product cost.
true
Shubelik Company is changing to an activity-based costing method. They have determined that they will use three cost pools: setups, inspections, and assembly. Which of the following would not be used as the activity base for any of these three activities? a. number of direct labor hours b. number of inspections c. number of setups d. number of units to be produced
d(
Determine the activity rate for materials handling per move. a. $64.33 b. $74.46 c. $174.14 d. $18.36
B0 IDK
The following information is available for Meyer Company: Dividends per share of common stock= $1.80 Market price per share of common stock= $30.00 Which of the following statements is correct? The dividend yield is 6.0%, which is of special interest to investors seeking to earn revenue on their investments. The dividend yield is 6.0%, which is of interest to investors seeking an increase in market price of their stocks. The dividend yield is 16.7% which is an important measure of solvency. The dividend yield is 16.7%, which is of interest to bondholders.
a)
Using multiple department factory overhead instead of a single plantwide factory overhead rate: a. results in more accurate product costs b. is simpler and less expensive to compute than a plantwide rate c. applies overhead costs to all departments equally d. results in distorted product costs
a)
Which of the following is a cost pool used with the activity-based costing method? a. production setups b. total selling and administrative overheads c. total factory overheads d. direct material dollars
a)
The amount of the estimated average income for a proposed investment of $75,000 in a fixed asset, giving effect to depreciation (straight-line method), with a useful life of 4 years, no residual value, and an expected total income yield of $24,600, is a. $12,900 b. $18,750 c. $6,150 d. $24,600
a) IDK
Area In horizontal analysis, each item is expressed as a percentage of the a. base year figure. b. net income figure. c. retained earnings figure. d. total assets figure.
a)
A plantwide factory overhead rate is computed by dividing total budgeted factory overhead costs by the plantwide allocation base.
true
a. Determine the total number of budgeted direct labor hours for year.fill in the blank 1 direct labor hours b. Determine the single plantwide factory overhead rate using direct labor hours as the allocation base. Round your answer to two decimal places, if necessary.$fill in the blank 2 per direct labor hour c. Determine the factory overhead allocated per unit for each product using the single plantwide factory overhead rate calculated in (b). Night Lights $ per unit Desk Lamps $ per unit
a) 190,000 b) 4.25 c) night: 2.13 desk: 8.5
The net present value for this investment is a. $19,875 b. $20,140 c. $(19,875) d. $(20,140)
b)
Using the tables above, what is the present value of $3,000 (rounded to the nearest dollar) to be received at the end of each of the next 4 years, assuming an earnings rate of 12%? a. $10,815 b. $7,206 c. $1,908 d. $9,111
b)
What is the price-earnings ratio for Diane Company? a. 4.0 times b. 6.0 times c. 8.0 times d. 2.5 times
b)
When several alternative investment proposals of the same amount are being considered, the one with the largest net present value is the most desirable. If the alternative proposals involve different amounts of investment, it is useful to prepare a relative ranking of the proposals by using a(n) a. consumer price index b. present value index c. average rate of return index d. price-level index
b)
Which of the following are present value methods of analyzing capital investment proposals? a. net present value and payback b. net present value and internal rate of return c. internal rate of return and average rate of return d. average rate of return and net present value
b)
The amount of the estimated average income for a proposed investment of $90,000 in a fixed asset, giving effect to depreciation (straight-line method), with a useful life of 4 years, no residual value, and an expected total income yield of $25,300, is a. $12,650 b. $45,000 c. $6,325 d. $25,300
c)
What is the dividend yield for Diane Company? a. 0.75% b. 13.3% c. 7.5% d. 1.3%
c)
What is the return on total assets for Diane Company? a. 1.0% b. 0.10% c. 10.0% d. 8.0%
c) (net income + interest expense)/average total assets
A balance sheet that displays only component percentages is a a. trend balance sheet. b. condensed balance sheet. c. comparative balance sheet. d. common-sized balance sheet.
d)
An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to a. remain the same. b. decrease. c. either increase or decrease. d. increase.
d)
By converting dollars to be received in the future into current dollars, the present value methods take into consideration that money a. is the language of business b. has a time value c. is the measure of assets, liabilities, and stockholders' equity on financial statements d. has an international rate of exchange
d)
Determine the activity rate for procurement per purchase order. a. $43.53 b. $15.42 c. $37.00 d. $18.50
d)
Determine the activity rate for production per machine hour. a. $150.00 b. $62.50 c. $176.47 d. $75.00
d)
The tendency of the return on stockholders' equity to vary disproportionately from the return on total assets is because of a. solvency. b. yield. c. quick assets. d. leverage.
d)
Which method for evaluating capital investment proposals reduces the expected future net cash flows originating from the proposals to their present values and computes a net present value? a. cash payback b. average rate of return c. internal rate of return d. net present value
d)
Which of the following can be used to place capital investment proposals involving different amounts of investment on a comparable basis for purposes of net present value analysis? a. rate of investment index b. price-level index c. future value index d. present value index
d)
What is the return on stockholders' equity? a. 20.5% b. 40.9% c. 7.3% d. 13.6%
d) net income/average stockholders equity
Activity rates are computed by dividing the cost budgeted for each activity pool by the estimated activity base for that pool.
false
Comparative financial statements are designed to compare the financial statements of two or more corporations.
false
Direct labor hours is not a cost pool that is regularly used in the activity-based costing method.
false
If a firm has a quick ratio of 1, the subsequent payment of an account payable will cause the ratio to increase.
false
If a proposed expenditure of $70,000 for a fixed asset with a 4-year life has an annual expected net cash flow and net income of $32,000 and $12,000, respectively, the cash payback period is 2.5 years.
false
In a common-sized income statement, each item is expressed as a percentage of net income.
false
In calculating the net present value of an investment in equipment, the required investment and its residual value should be subtracted from the present value of all future cash inflows.
false
In computing the return on total assets, interest expense is subtracted from net income before dividing by average total assets.
false
Methods that ignore present value in capital investment analysis include the cash payback method.
false
On a common-sized income statement, all items are stated as a percent of total assets or equities at year-end.
false
Question Content Area A 15% change in sales will result in a 15% change in net income.
false
Question Content Area Multiple production department factory overhead rates are more accurate than are plantwide factory overhead rates.
false
Question Content Area The cash payback method can be used only when net cash inflows are the same for each period.
false