accunting exam 2

Does not differ for each option available to the decision maker.

A cost is not relevant for decision making if it:

The theoretical development of appropriate decision models.

Accounting makes all the following contributions to the capital budgeting process except:

The revenue required to achieve a desired profit level.

Cost-volume-profit (CVP) analysis for revenue planning determines:

Sales increase rapidly along with an increase in product variety.

During the sales life cycle, which is an example of what happens during the growth phase?

Maturity.

During which stage of the sales life cycle of a product do sales continue to increase but at a decreasing rate, and competition tends to focus on cost?

Typically do not differ in total between decision alternatives being considered.

Fixed costs will often be irrelevant for short-term decision making because they:

During the initiation stage of the project (i.e., at time period 0).

For a typical capital investment project, the bulk of the investment-related cash outflow occurs:

He set a price that would result in more sales, and then would work to force costs down by finding the highest point of efficiency.

How did Henry Ford implement target costing in his business?

In the contribution income statement, variable costs are subtracted from sales to get total contribution margin.

How does a contribution income statement differ from a conventional income statement?

After-tax cash flows and the timing of these cash flows.

In making sound capital budgeting decisions, the principal focus is on:

Opportunity cost from lost sales.

Operating at or near full capacity will require a firm considering a "special sales order" to potentially recognize the:

Opportunity costs.

The benefit lost when choosing one option precludes receiving the benefits from an alternative option is called what?

The sales volume at which revenues equal total cost plus an operating profit of zero.

The breakeven point is:

Book (i.e., accounting) rate of return method.

The capital budgeting method(s) that is(are) most likely to provide consistency between data for capital budgeting and data for subsequent performance evaluation is(are) the:

The desired inventory levels of the product.

The decision to keep or drop products or services involves strategic consideration of all the following except:

Contribution margin per unit (cm).

The difference between sales price per unit and variable cost per unit is the:

There may be a number of relevant drivers, some not immediately obvious.

The identification of cost drivers is perhaps the most important step in developing the cost estimate because:

Capital budgeting.

The process of identifying, evaluating, selecting, and controlling capital investments is referred to as:

Sales life cycle.

The sequence of phases in the product or service's life in the market - from the introduction of the product or service to the growth in sales and finally maturity, decline, and withdrawal from the market is the:

All stages (initiation, operation, and final disposal) of the project.

The tax impact of a capital investment project (such as the replacement of a major piece of machinery) is present during:

Net present value (NPV) method.

The time value of money is explicitly considered in which one of the following capital budgeting method(s)?

Outsourcing options.

The value-chain analysis used regarding the "make-or-buy decision" often leads a firm to make use of:

Have not been committed and are likely to differ between decision alternatives.

Variable costs will generally be relevant for decision making because they:

Target costing.

When a firm determines the desired cost for a product or service, given a competitive market price, in order to earn a desired profit, the firm is exercising:

It considers returns over the entire life of the project.

Which of the following is not a characteristic of the payback method for making capital budgeting decisions?

The purchase of raw materials for inventory.

Which of the following is not an example of a capital investment?

Growth and decline.

Which of the following phases are included in the sales life cycle?

It is used when calculating the internal rate of return (IRR) of a proposed investment.

Which of the following statements regarding cost of capital is not true?