Question  

Question 1.1.(TCO 9) To guide cost allocation decisions, the cause-and-effect criterion(Points : 3)

may allocate corporate salaries to divisions based on profits

is used less frequently than the other criteria

is the primary criterion used inactivity-based costing

is a difficult criterion on which to obtain agreement

Question 2.2.(TCO 9) Which cost-allocation criterion is superior when making an economic decision?(Points : 3)

Fairness-or-equity criterion

Ability-to-bear criterion

Cause-and-effect criterion

All of the above

Question 3.3.(TCO 9) The MOST likely reason for NOT allocating corporate costs to divisions include that(Points : 3)

divisions receive no benefits from corporate costs

these costs are not controllable by division managers

these costs are incurred to support division activities, not corporate activities

division resources are already used to attain corporate goals

Question 4.4.(TCO 9)Identifying homogeneous cost pools(Points : 3)

requires judgment and should be reevaluated on a regular basis

should include the input of management

should include a cost-benefit analysis

All of the above

Question 5.5.(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 $6,000,000for expansion. Interest costs on the bond totaled $1,500,000 for the year. Which corporate costs should be allocated to divisions?(Points : 3)

Variable costs

Fixed costs

Neither fixed nor variable costs

Both fixed and variable costs

Question 6.6.(TCO 10) The stage of the capital budgeting process in which a firm obtains funding for the project is the(Points : 3

obtain-information stage.

implement the decision, evaluate performance, and learn stage.

make-decisions-by-choosing-among-alternatives stage.

make-predictions stage.

Question 7.7.(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 investment rates average 9% and you have a 15-year work life? (Points : 3)

$41,286

$37,853

$25,554

$34,059

Question 8.8.(TCO 10) If the net present value for a project is zero or positive, this means that the (Points : 3)

project should be accepted

project should not be accepted

expected rate of return is below the required rate of return

Both 1 and 3are correct

Question 9.9.(TCO 10) An important advantage of the net-present-value method of capital budgeting over the internal rate-of-return method is(Points : 3)

the net present value method is expressed as a percentage

the net present values of individual projects can be added to determine the effects of accepting a combination of projects

there is no advantage

Both 1and 2 are correct

Question 10.10.(TCO 10) Upper Darby Park Department is considering a new capital investment. The following information is available on the investment. The cost of the machine will be $150,000. The annual cost savings if the new machine is acquired will be $40,000. The machine will have a five-year life, at which time the terminal disposal value is expected to be $20,000. Upper Darby Park Department is assuming no tax consequences. If Upper Darby Park Department has a required rate of return of 10%, which of the following is closest to the present value of the project?(Points : 3)

$1,632

$150,000

$14,060

$12,418