# ACCT 505 Final Exam

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**ACCT 505 Final Exam 3**

1. A good example of a common cost which normally could not be assigned to products on a segmented income statement except on an arbitrary basis would be:

2.Turnover is computed by dividing average operating assets into:

3.A segment of a business responsible for both revenues and expenses would be called:

4.All other things being equal, if a division's traceable fixed expenses increase:

5.In computing the margin in a ROI analysis, which of the following is used?

6.Net operating income is defined as:

7.Suppose a manager is to be measured by residual income. Which of the following will not result in an increase in the residual income figure for this manager,

8. During April, Division D of Carney Company had a segment margin ratio of 15%, a variable expense ratio of 60% of sales, and traceable fixed expenses of $15,000.

9. Cable Company had the following results for the year just ended:

10. Use the following to answer question 10: Ieso Company has two stores: J and K. During November, Ieso Company reported a net income of $30,000 and sales of $450,000. The contribution margin in Store J was $100,000, or 40% of sales.

11.Company A's residual income is:

12.Company A's return on investment (ROI) is:

13. The following data are available for the South Division of Redride Products, Inc. and the single product it makes: If South wants a residual income of $50,000 and the minimum required rate of return is 10%,

14. The following selected data pertain to Beck Co.'s Beam Division for last year:

15.Consider a decision facing a firm of either accepting or rejecting a special offer for one of its products. A cost that is not relevant is:

16.A study has been conducted to determine if Product A should be dropped. Sales of the product total $200,000 per year; variable expenses total $140,000 per year.

17.Manor Company plans to discontinue a department that has a contribution margin of $24,000 and $48,000 in fixed costs. Of the fixed costs, $21,000 cannot be avoided.

18.Manor Company plans to discontinue a department that has a contribution margin of $25,000 and $50,000 in fixed costs. Of the fixed costs, $21,000 cannot be eliminated.

19.Green Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is:

20.Pitkin Company produces a part used in the manufacture of one of its products. The unit product cost of the part is $33, computed as follows:

21. Cardinal Company needs 20,000 units of a certain part to use in one of its products. The following information is available:

22. Products A, B, and C are produced from a single raw material input. The raw material costs $90,000, from which 5,000 units of A, 10,000 units of B, and 15,000 units of C can be produced each period.

23. The Tolar Company has 400 obsolete desk calculators that are carried in inventory at a total cost of $26,800. If these calculators are upgraded at a total cost of $10,000, they can be sold for a total of $30,000. As an alternative,

24. Aholt Company makes 40,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: An outside supplier has offered to sell the company all of these parts it needs for $46.20 a unit.

25. The Madison Company produces three products with the following costs and selling prices:

26.If Austin chooses to produce 4,000 afghans each month, the change in the monthly net operating income as compared to selling 4,000 spindles of yarn is:

27. What is the lowest price Austin should be willing to accept for one afghan as long as it can sell spindles of yarn to the outside market for $12 each?

28.(Ignore income taxes in this problem.) How is depreciation handled by the following capital budgeting techniques?

29. The payback method measures:

30.The evaluation of an investment having uneven cash flows using the payback method:

31.If the net present value of a project is zero based on a discount rate of sixteen percent, then the time-adjusted rate of return:

32. (Ignore income taxes in this problem.) A company with $800,000 in operating assets is considering the purchase of a machine that costs $75,000 and which is expected to reduce operating costs by $20,000 each year.

33.(Ignore income taxes in this problem.) Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $450,000 and would have a ten-year useful life.

34.Perkins Company is considering several investment proposals, as shown below:

35. (Ignore income taxes in this problem.) The following data pertain to an investment proposal:

36. (Ignore income taxes in this problem.) Sam Weller is thinking of investing $70,000 to start a bookstore. Sam plans to withdraw $15,000 from the business at the end of each year for the next five years.

37. (Ignore income taxes in this problem.) The Finney Company is reviewing the possibility of remodeling one of its showrooms and buying some new equipment to improve sales operations.

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