ACCT 434 Week 6 Quiz 1

ACCT 434 Week 6 Quiz 1

1. (TCO 9) To guide cost allocation decisions, the benefits-received criterion

2. (TCO 9) A challenge to using cost-benefit criteria for allocating costs is that

3. (TCO 9) The MOST likely reason for NOT allocating corporate costs to divisions include that

4. (TCO 9) Identifying homogeneous cost pools

5. (TCO 9) The Hassan Corporation has an electric mixer division and an electric lamp division. Of a $20,000,000 bond issuance, the electric mixer division used $14,000,000 and the electric lamp division used $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. What amount of interest costs should be allocated to the electric lamp division?

6. (TCO 10) All of the following are methods that aid management in analyzing the expected results of capital budgeting decisions EXCEPT the

7. (TCO 10) Assume your goal in life is to retire with $1.5 million. How much would you need to save at the end of each year if interest rates average 5% and you have a 25-year work life?

8. (TCO 10) The definition of an annuity is

9. (TCO 10) A “what-if” technique that examines how a result will change if the original predicted data are not achieved or if an underlying assumption changes is called

10. (TCO 10) Shirt Company wants to purchase a new cutting machine for its sewing plant. The investment is expected to generate annual cash inflows of $300,000. The required rate of return is 12% and the current machine is expected to last for four years. What is the maximum dollar amount Shirt Company would be willing to spend for the machine, assuming its life is also four years? Income taxes are not considered.

ACCT 434 Week 6 Quiz 2

1. (TCO 9) To guide cost allocation decisions, the benefits-received criterion

2. (TCO 9) Which cost-allocation criterion is MOST likely to subsidize poor performers at the expense of the best performers?

3. (TCO 9) Some companies only allocate corporate costs to divisions that are

4. (TCO 9) Corporate administrative costs allocated to a division cost pool are MOST likely to be

5. (TCO 9) The Hassan Corporation has an electric mixer division and an electric lamp division. Of a $20,000,000 bond issuance, the electric mixer division used $14,000,000 and the electric lamp division used $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. What amount of interest costs should be allocated to the electric lamp division?

6. (TCO 10) All of the following are methods that aid management in analyzing the expected results of capital budgeting decisions EXCEPT the

7. (TCO 10) Assume your goal in life is to retire with $1 million. How much would you need to save at the end of each year if interest rates average 6% and you have a 20-year work life?

8. (TCO 10) The net-present-value method focuses on

9. (TCO 10) An important advantage of the net-present-value method of capital budgeting over the internal rate-of-return method is

ACCT 434 Week 6 Quiz 3

1. Related to Problem 1, compute the operating income for each of the five customers.

2. Related to Problem 1, what options should Handy-Man Services consider in light of the customer-profitability results?

3. Related to Problem 1, what problems might Handy-Man Services encounter in accurately estimating the operating costs of each customer?

4. Related to Problem 2, compute the payback period, net present value, and accrual accounting rate of return with initial investment, for each proposal. Use a required rate of return of 14%.

5. Related to Problem 2, rank each proposal 1, 2, and 3 using each method separately. Which proposal is best? Why