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Management Accounting Quiz

Total questions: 20

Worksheet time: 10mins

Name
Class
Date
1.

The payback method ignores the ________. Select one:

a)

early cash flows

b)

time value of money

c)

cash flows occurring during the payback period

d)

None of the above

2.

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

a)

increase

b)

decrease

c)

remain the same

d)

None of the above

3.

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

a)

more than one sign change

b)

less than four sign changes

c)

more than two sign changes

d)

None of the above

4.

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

a)

profitability index

b)

pay back period

c)

net present value

d)

internal rate of return

5.

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

a)

variable cost increases and sales remain unchanged

b)

variable cost increases and sales increase

c)

fixed cost increases

d)

fixed cost decreases

6.

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:

a)

15,000

b)

12,00

c)

10,000

d)

25,000

7.

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

a)

the break-even point

b)

contribution margin

c)

total variable costs

d)

unit selling price

8.

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

a)

in percent form

b)

for each dollar of initial investment

c)

per payback period

d)

per time period

9.

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:

a)

44,000

b)

7,500

c)

86,279

d)

7,756

10.

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

a)

contribution margin percentage increases

b)

break-even point in pesos increases

c)

selling price increases

d)

fixed costs decrease

11.

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

a)

selling price increases

b)

contribution margin percentage increases

c)

break-even point in pesos increases

d)

fixed costs decrease

12.

Which of the following is a reason why above-normal profits may be available in the market place? Select one:

a)

All of the above

b)

Buyer preference for established brand names

c)

Superior access to lower cost financial resources

d)

Exclusive ownership of superior natural resource deposits

13.

The Red Lions Brotherhood is planning its annual Riverboat Extravaganza. The Extravaganzacommittee has assembled the following expected costs for the event:Dinner per person P70;Programs and souvenir per person 30; Orchestra 15,000; Tickets and advertising 7,000; Riverboat rental 48,000; Floor show and strolling entertainment 10,000.The committee members would like to charge P300 per person for the evening’s activities.Assume that only 250 persons are expected to attend the extravaganza, what ticket price mustbe charged to breakeven? Select one:

a)

390

b)

320

c)

350

d)

420

14.

Which of the following is an example of a real option in capital budgeting? Select one:

a)

All of the above

b)

Shutdown option

c)

Growth option

d)

Investment timing options

15.

The ________ is defined as the discount rate that equates the present value of the net cash flows from a project with the present value of the net investment. Select one:

a)

profitability index

b)

net present value

c)

internal rate of return

d)

pay back period

16.

As fixed costs for a firm rise, all other things held constant, the breakeven point will Select one:

a)

not be affected by fixed costs

b)

decrease

c)

increase

d)

be unchanged

17.

If all goes according to plan except that unit variable cost falls, Select one:

a)

profit will be higher than expected

b)

the contribution margin percentage will be lower than expected

c)

total contribution margin will be lower than expected

d)

per-unit contribution margin will be lower than expected

18.

Albatross Company has fixed costs of 90,300. At a sales volume of 360,000, return onsales is 10%; at a 600,000 volume, return on sales is 20%. What is the break-even volume? Select one:

a)

258,000

b)

301,000

c)

240,000

d)

225,000

19.

Green Corporation expects to sell 3,000 plants a month. Its operations manager estimated thefollowing monthly costs: Variable costs 7,500;Fixed costs 15,000. What sales price per plant does she need to achieve to begin making a profit if she sells theestimated number of plants per month? Select one:

a)

5.00

b)

2.50

c)

7.50

d)

7.51

20.

The Hard Company sells widgets. The company breaks even at an annual sales volume of80,000 units. At an annual sales volume of 100,000 units the company reports a profit of 220,000.The annual fixed costs for the Hard Company are: Select one:

a)

800,000

b)

1,000,000

c)

880,000

d)

1,100,000