15 which one of the following would cause a companys

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15. Which one of the following would cause a company’s production budget to decrease? a. An increase in direct labor costs per unit. b. A decrease in units produced per direct labor hour. c. A decrease in required ending inventory. d. An increase in beginning direct labor inventory. 16. A company is the leading company in the premium bottled water industry. Its growth is mainly driven by the negative health publicity on carbonated soft drinks and other sweetened beverages. Extensive inventory and distribution infrastructure is needed to compete in this industry. Its main packaging materials can be sourced either locally or easily imported from overseas. With its 60% market share, the company is able to influence prices and competitive activity. The second biggest competitor holds 20% market share, while the remaining 20% is shared by many small companies. Supermarkets and other grocery retailers are the largest customer segment, accounting for approximately 45% of sales. The supermarkets and grocery retailers are driving volume growth and are undergoing consolidation into larger supermarket conglomerates. Using Porter’s 5 Forces, which one of the following statements best reflects the industry environment? a. Low profitability but can increase due to increasing power of buyers. b. Low profitability due to low threat of substitutes and new entrants. c. High profitability but can decrease due to increasing power of buyers. d. High profitability due to high power of buyers and sellers. 17. Which one of the following actions would most effectively address the issue of internal control risk related to the custody of cash receipts?
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436 a. Establishing a lockbox deposit system at a regional bank. b. Assigning a single employee to be responsible for the receipt and posting of cash receipts to customer accounts. c. Preparing a control total of cash receipts immediately upon opening incoming payments. d. Installing a surveillance system to monitor the processing of cash receipts and custody of cash. 18. Devin’s Custom Construction designs and builds custom houses for consumers. Customers have several base plans to choose from and modifications can be made from those plans. The modifications can range from being very minor to significant. The houses generally take from 3 months to one year to design and build depending upon the amount of customization. What is the best type of budgeting for this business situation? a. Project budgeting. b. Activity-based budgeting. c. Flexible budgeting. d. Rolling/continuous budgeting. 19. Business unit A has a return on investment of 10%, with a net profit for the year of $40,000. The opportunity cost for the business unit investments has been calculated at 8%. The company plans to purchase a new machine worth $100,000 and expects the net profit to rise by an additional $15,000. The new purchase decision will increase the return on investment a. by 1% and increase the residual income by $8,000.
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