Management Accounting Quiz

The payback method ignores the ________. Select one:

• early cash flows

• time value of money

• cash flows occurring during the payback period

• None of the above

During inflationary periods the level of capital expenditures made by firms tends to ________. Select one:

• increase

• decrease

• remain the same

• None of the above

Multiple internal rates of return sometimes occur when a project's cash flow patterns contain ________.

• more than one sign change

• less than four sign changes

• more than two sign changes

• None of the above

The ________ is defined as the present value of net cash flows form the project minus the net investment. Select one: a. profitability index b. pay back period c. net present value d. internal rate of return

• profitability index

• pay back period

• net present value

• internal rate of return

The break-even point in total sales decreases when: Select one:

• variable cost increases and sales remain unchanged

• variable cost increases and sales increase

• fixed cost increases

• fixed cost decreases

An organization's break-even point is 4,000 units at a sales price of 50 per unit, variable cost of 30 per unit, and total fixed costs of 80,000. If the company sells 500 additional units, by how much will its profit increase? Select one:

• 15,000

• 12,00

• 10,000

• 25,000

An increase in the unit variable cost will generally cause an increase in all of the following except Select one:

• the break-even point

• contribution margin

• total variable costs

• unit selling price

The profitability index is interpreted as the present value return ________. Select one:

• in percent form

• for each dollar of initial investment

• per payback period

• per time period

If a project's net cash flow is $17,000 a year for the next 7 years, the net investment is $75,000, and the cost of capital is 10 percent, what is the NPV of the project? Select one:

• 44,000

• 7,500

• 86,279

• 7,756

If variable cost as a percentage of sales increases, the Select one:

• contribution margin percentage increases

• break-even point in pesos increases

• selling price increases

• fixed costs decrease