chapter 20-22 exam

# chapter 20-22 exam - 1 Question: Atlantic Company is...

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1 Question: Atlantic Company is considering investing in specialized equipment costing \$360,000. The equipment has a useful life of 5 years and a residual value of \$45,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are Year 1 \$160,000 Year 2 130,000 Year 3 100,000 Year 4 55,000 Year 5 40,000 \$485,000 What is the accounting rate of return on the investment? 16.8% 23.9% 18.9% 12.4% Question 2 - Multiple ChoiceID: 5631054 - The correct answer has been circled. Question: The direct materials price variance should be calculated When the materials are purchased When the materials are requisitioned for use At the end of the reporting period When the actual quantity of materials used is known Question 3 - Multiple ChoiceID: 5630977

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2 - Correct Question: Sullivan Company is considering the purchase of a new machine costing \$80,000. Sullivan’s management is estimating that the new machine will generate additional cash flows of \$12,000 a year for ten years and have a salvage value of \$3,000 at the end of ten years. What is the machine’s payback period? 7 years 6.7 years 6 years 5.33 years Question 4 - Multiple ChoiceID: 5631034 - Correct Question: Which of the following does not need to be known in order to create a flexible budget? The variable cost per unit The fixed cost per unit The budgeted selling price Different volume levels within the relevant range Question 5 - Multiple ChoiceID: 5631039 - Correct Question: Western Outfitters Mountain Sports projected 2008 sales of 75,000 units at a unit sale price of \$12. Actual 2008 sales were 72,000 units at \$14 per unit. Actual variable costs, budgeted at \$4 per unit, totaled \$4.75 per unit. Budgeted fixed costs totaled \$375,000, while actual fixed costs amounted to \$400,000. What is the sales volume variance for total revenue? \$144,000 favorable \$42,000 unfavorable
3 \$108,000 favorable \$36,000 unfavorable Question 6 - Multiple ChoiceID: 5631032 - Correct Question: Sassy Company sells its widgets for \$20 each. Its variable cost is \$12 per widget. Fixed costs are \$150,000 per month for volumes up to 70,000 widgets. Above 70,000 widgets, monthly fixed costs are \$200,000. What is the budgeted operating income at a level of 60,000 widgets per month? \$280,000 \$330,000 \$480,000 \$1,200,000 Question 7 - Multiple ChoiceID: 5631025 - Correct Question: Responsibility accounting performance reports should not be used to Evaluate division performance Evaluate individual product lines Compare actual results to the budget Direct blame to particular individuals when variances are unfavorable

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## This note was uploaded on 03/25/2012 for the course EAC 2212 taught by Professor Whitaker during the Spring '10 term at FIT.

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chapter 20-22 exam - 1 Question: Atlantic Company is...

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