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
