QUESTION NO: 1
A company comprises several divisions.
One of these divisions was originally expected to earn an operating profit next year of $800,000 on net assets of $4 million.
However, the divisional manager is considering investing in a project that would generate a project return on investment (ROI) of 38% on additional net assets of $500,000.
What would be the divisional ROI next year if the project was implemented?
Give your answer to the nearest percentage.
A company comprises several divisions.
One of these divisions was originally expected to earn an operating profit next year of $800,000 on net assets of $4 million.
However, the divisional manager is considering investing in a project that would generate a project return on investment (ROI) of 38% on additional net assets of $500,000.
What would be the divisional ROI next year if the project was implemented?
Give your answer to the nearest percentage.
Correct Answer:
22 %
QUESTION NO: 2
Which basis of transfer pricing retains the full autonomy of divisional managers?
Which basis of transfer pricing retains the full autonomy of divisional managers?
Correct Answer: A
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QUESTION NO: 3
In accordance with a just-in-time (JIT) philosophy, which of the following is regarded as a value added activity?
In accordance with a just-in-time (JIT) philosophy, which of the following is regarded as a value added activity?
Correct Answer: A
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QUESTION NO: 4
Place each performance measure against the correct perspective of the Balanced Scorecard for a company that operates a chain of hotels.
Place each performance measure against the correct perspective of the Balanced Scorecard for a company that operates a chain of hotels.
Correct Answer:
QUESTION NO: 5
Residual income is an appropriate performance measure for which type of responsibility centre?
Residual income is an appropriate performance measure for which type of responsibility centre?
Correct Answer: B
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QUESTION NO: 6
Which of the following are TRUE about the theory of constraints? Select ALL that apply.
Which of the following are TRUE about the theory of constraints? Select ALL that apply.
Correct Answer: A,C,D
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QUESTION NO: 7
One aspect of life cycle costing is the recognition of the fact that during the design or development stage a large proportion of many products' life cycle costs are:
One aspect of life cycle costing is the recognition of the fact that during the design or development stage a large proportion of many products' life cycle costs are:
Correct Answer: A
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QUESTION NO: 8
Which TWO of the following actions taken during the budgetary planning process will result in the creation of budgetary slack?
Which TWO of the following actions taken during the budgetary planning process will result in the creation of budgetary slack?
Correct Answer: C,D
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QUESTION NO: 9
A manufacturing company is in the process of introducing just in time (JIT) and total quality management (TQM) into every aspect of its value chain.
Which TWO of the following are appropriate changes to make to the support activities in the organization's value chain?
A manufacturing company is in the process of introducing just in time (JIT) and total quality management (TQM) into every aspect of its value chain.
Which TWO of the following are appropriate changes to make to the support activities in the organization's value chain?
Correct Answer: B,C
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QUESTION NO: 10
Which of the following is a correct description of the key features of net present value?
Which of the following is a correct description of the key features of net present value?
Correct Answer: D
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QUESTION NO: 11
Place the correct category of Value Chain activity against each of the activities described below.
Place the correct category of Value Chain activity against each of the activities described below.
Correct Answer:
QUESTION NO: 12
The following information is available for four investment projects:
A discount rate of 12% is appropriate for all four projects. The organization is subject to capital rationing and wishes to prioritise the projects using the profitability index (PI).
Which project has the highest PI?
The following information is available for four investment projects:
A discount rate of 12% is appropriate for all four projects. The organization is subject to capital rationing and wishes to prioritise the projects using the profitability index (PI).
Which project has the highest PI?
Correct Answer: C
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QUESTION NO: 13
Which of the following is a valid objective of a transfer pricing system?
Which of the following is a valid objective of a transfer pricing system?
Correct Answer: B
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QUESTION NO: 14
A company is considering two mutually exclusive projects, an analysis of which is given below:
The company's cost of capital is 12%.
Assuming an objective of maximising shareholders' wealth, which project would be recommmended?
A company is considering two mutually exclusive projects, an analysis of which is given below:
The company's cost of capital is 12%.
Assuming an objective of maximising shareholders' wealth, which project would be recommmended?
Correct Answer: D
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QUESTION NO: 15
A division of a company transfers all its output to other divisions in the same company.
For this division, which of the following measures is NOT affected by the transfer price that the division uses?
A division of a company transfers all its output to other divisions in the same company.
For this division, which of the following measures is NOT affected by the transfer price that the division uses?
Correct Answer: C
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