ACC650 Module 8-Quiz Review Using
Accounting Information in Decision Making
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Module
8 Quiz : Using Accounting Information in Decision Making
1) The following data pertain to Lemon
Enterprises:
a. Variable manufacturing cost: $70
b. Variable selling and administrative
cost: 20
c. Applied fixed manufacturing cost: 40
d. Allocated fixed selling and
administrative cost: 15
e. What price will the company charge if
the firm uses cost-plus pricing based onvariable manufacturing cost and a
markup percentage of 110%?
$84.
$147.
$210.
$231.
Some other amount.
2) Which of the following represents the
cost-plus pricing formula?
a. Price = cost + (markup percentage *
cost).
Price = cost + markup percentage.
Price = cost + markup percentage.
Price = cost * markup percentage.
Price = cost + (markup percentage + cost).
3) Which of the following is the proper
calculation of a company's depreciation tax shield?
a. Depreciation deduction + income taxes.
Depreciation * (1 - tax rate).
Depreciation * tax rate.
Depreciation / tax rate.
Depreciation / (1 - tax rate).
4) The net-present-value method assumes
that project funds are reinvested at the:
a. hurdle rate.
rate of return earned on the project.
cost of debt capital.
cost of equity capital.
internal rate of return.
5) In a net-present-value analysis, the
discount rate is often called the:
a. payback rate.
hurdle rate.
minimal value.
net unit rate.
objective rate of return.
6) The term "opportunity cost"
is best defined as:
a. an irrelevant decision factor.
the benefit associated with a rejected
alternative when making a choice.
the amount of money paid for an item, taking
inflation into account.
the amount of money paid for an item.
the amount of money paid for an item, taking
possible discounts into account.
7) Discounted-cash-flow analysis focuses
primarily on:
a. the stability of cash flows.
the timing of cash flows.
the probability of cash flows.
the sensitivity of cash flows.
whether cash flows are increasing or
decreasing.
8) From an economic perspective, a
company's profit-maximizing quantity is found where:
the total cost curve intersects with the
marginal cost curve.
the total revenue curve intersects with the
average revenue curve.
the marginal revenue curve intersects with the
demand curve.
the marginal revenue curve intersects with the
marginal cost curve.
the marginal cost curve intersects with the
demand curve.
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