1.Which of the following was not one of the responsibility centers mentioned in the video?
A) Debt center
2.The video mentions that residual income is used to evaluate:
A) investment centers
3.Margin equals:
A) net operating income ÷ sales
4.Return on investment equals:
A) margin × turnover
5.Residual income equals:
A) net operating income − (average operating assets × minimum required rate of return)
6.Which of the following statements is true?
A) If an investment opportunity increases residual income then the investment center manager and the company are likely to support making the investment.
7.Which of the following statements is true?
A) Opportunity costs are relevant when making decisions and sunk costs are irrelevant when making decisions.
8.Which of the following statements is true?
A) Future costs that do not differ between the alternatives are irrelevant to the decision-making process.
9.Which of the following statements is true with respect to the example described in the video?
A) The depreciation was included in the calculation of the average cost per mile, but it was labeled as an irrelevant cost for decision-making purposes.
10.Which of the following statements is true with respect to the example described in the video?
A) The variable operating cost per mile was included in the calculation of the average cost per mile and it was labeled as a relevant cost for decision-making purposes.
11.The first step in the three-step process described in the video is to
A) calculate the contribution margin that would disappear if the segment is dropped.
12.Which of the following statements is true with respect to the example described in the video?
A) The insurance on inventories was treated as a relevant cost.
13.The second step in the three-step process described in the video is to:
A) calculate the total differential manufacturing costs.
14.Which of the following statements is true with respect to the example described in the video?
A) The fixed manufacturing overhead, common, but allocated was treated as an irrelevant cost.
15.Which of the following statements is false with respect to special order decisions?
A) The company considering the special order is usually operating at full capacity.
16.Which of the following statements is true with respect to the example described in the video?
A) The special tool mentioned in the problem was treated as an incremental fixed cost.
17.Which of the following guidelines for making volume trade-off decisions is mentioned in the video?
A) Do not produce more units of any product than is demanded by customers.
18.Which of the following was the constraining resource in the example discussed in the video?
A) Pounds of direct materials
19.Which of the following was introduced as an additional assumption in the example discussed in the video?
A) The maximum demand for each product is 1,000 units.
20.Which product was the focal point of the analysis in the example discussed in the video?
A) Product X
21.Which of the following statements is true with respect to sell or process further decisions?
A) All joint costs should always be ignored.
22.Which of the following is the first step in the three-step process discussed in the video?
A) Calculate the sales value if processed further minus the sales value at the split-off point.
23.Which of the following capital budgeting methods does not consider cash flows?
A) Simple rate of return
24.Which of the following capital budgeting methods considers cash flows, but ignores the time value of money?
A) Payback method
25.Which of the following equations can be used to compute the payback period?
A) Investment required ÷ Annual net cash inflow
26.Which of the following statements is true regarding the payback method?
A) It ignores cash flows after the payback period.
27.If the net present value of a project is zero, then the project:
A) is acceptable because it promises a return equal to the required rate of return.
28.Which of the following is usually regarded as the minimum required rate of return?
A) A company’s cost of capital.
29.The internal rate of return finds the discount rate that causes a project’s net present to value to be:
A) equal to zero.
30.When the future cash flows are the same every year, we can calculate the internal rate of return using which of the following equations?
A) Present value factor = Investment required ÷ Annual net cash inflow
31.Which of the following Microsoft Excel functions was illustrated in this video?
A) Goal seek
32.The video suggested using which of the following equations to ascertain the value of uncertain cash flows?
A) Net present value to be offset ÷ Present value factor
33.The profitability index is used for:
A) preference decisions.
34.Which of the following equations computes the profitability index?
A) Present value of cash inflows ÷ Investment required
35.Which of the following formulas computes the simple rate of return?
A) Annual incremental net operating income ÷ Initial investment
36.Which of the following statements is true regarding the initial investment when computing the simple rate of return?
A) It should be reduced by the salvage value of old equipment.
37.A dollar received today is:
A) worth more than a dollar received a year now.
38.The example discussed in the video focused on investments X and Y. Which of the following statements is true with respect to these investments?
A) Investments X and Y had the same total cash inflows over the four-year period.