Devry BUSN 278 Final Exam Latest



Devry BUSN 278 Final Exam Latest


Question 1.1. (TCO 1) The type of budget that is prepared for the expected capacity level only is called a _______. (Points : 5)

static budget.

flexible budget.

continuous budget.

master budget.

Question 2.2. (TCO 2) Which of the following is not a qualitative forecasting method? (Points : 5)

Executive opinions

Sales force polling

Delphi method

Classical decomposition

Question 3.3. (TCO 3) Which of the following is not used to evaluate the accuracy of regression results? (Points : 5)

Mean absolute deviation

Coefficient of determination

Prediction confidence interval


Question 4.4. (TCO 4) Marketing expenses typically increase in proportion to _____.

(Points : 5)

number of customer orders.

advertising dollars.

sales dollars.

salespersons’ salaries.

Question 5.5. (TCO 5) Which of the following is not true of the decision packages used in zero-base budgeting? (Points : 5)

Decision packages should include alternative methods of performing the activity.

Decision packages may cross functional and organizational lines.

Decision packages can be either mutually exclusive or incremental.

Decision packages may cover either short-term or long-term periods.

Question 6.6. (TCO 6) When using the payback period technique, the payback period is expressed in terms of _____.

(Points : 5)

a percentage




Question 7.7. (TCO 6) All of the following statements about the accounting rate of return method are correct except that it _____.

(Points : 5)

considers the profitability of a capital expenditure

ignores the salvage value of an investment

does not consider the time value of money

uses income data rather than cash flow data

Question 8.8. (TCO 6) A company projects annual cash inflows of $85,000 each year for the next 5 years if it invests $300,000 in new equipment. The equipment has a 5-year life and an estimated salvage value of $75,000. What is the accounting rate of return on this investment? (Points : 5)





Question 9.9. (TCO 6) Bradshaw Inc. is contemplating a capital investment of $85,000. The cash inflows over the project’s 4 years are as follows.


Expected Cash Inflow









The payback period is _____.

(Points : 5)

2.17 years

3.35 years

2.30 years

3.47 years

Question 10.10. (TCO 6) Munson Inc. is comparing several alternative capital budgeting projects as shown below.





Initial Investment




Present value of cash inflows




Using the profitability index, rank the projects, starting with the most attractive. (Points : 5)

A, C, B

A, B, C

C, A, B

C, B, A

Question 11.11. (TCO 6) A company has a minimum required rate of return of 10%. It is considering investing in a project that costs $210,000 and is expected to generate cash inflows of $85,000 at the end of each year for 4 years. The approximate net present value of this project is _____.

(Points : 5)





Question 12.12. (TCO 7) Which of the following is not an operating budget? (Points : 5)

Selling and administrative expense budget

Direct materials budget

Pro forma balance sheet

Pro forma income statement

Question 13.13. (TCO 7) A company budgeted unit sales of 102,000 units for January, 2008 and 120,000 units for February, 2008.The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month’s budgeted unit sales. If there were 30,600 units of inventory on hand on December 31, 2007, how many units should be produced in January, 2008 in order for the company to meet its goals? (Points : 5)

107,400 units

102,000 units

96,600 units

138,000 units

Question 14.14. (TCO 8) A variance that results from expected economic conditions that do not materialize is called what? (Points : 5)

Sales variance

Planning variance

Economic variance

Material variance

Question 15.15. (TCO 9) A static budget is appropriate in evaluating a manager’s performance if _____.

(Points : 5)

actual activity closely approximates the master budget activity

actual activity is less than the master budget activity

the company prepares reports on an annual basis

the company is a not-for-profit organization

Question 16.16. (TCO 9) Which of the following is not a cost classification? (Points : 5)





Question 17.17. (TCO 9) At the high level of activity in November, 7,000 machine hours were run and power costs were $12,000. In April, a month of low activity, 2,000 machine hours were run and power costs amounted to $6,000. Using the high-low method, what is the estimated fixed cost element of power costs? (Points : 5)





Question 18.18. (TCO 10) Which of the following statements regarding budget reports is incorrect? (Points : 5)

The cost of budget reports should not outweigh the benefits.

Budget reports are used for planning, control, and information.

Reports prepared for upper management typically have fewer details than reports prepared for lower level managers.

Reports are prepared more frequently for upper management than for lower level managers.

Page 2

Question 1.1. (TCO 7) The cash budget is one of the primary financial budgets. Discuss the importance of the cash budget. Identify the individual sections of the cash budget and the information included in each section. (Points : 20)



Question 2.2. (TCO 9) Understanding how costs behave can help managers plan operations and choose between various courses of action.

Part (a): Identify and describe the three types of cost behavior, including examples of each.
Part (b): As a manager, which cost behavior would you prefer and why? (Points : 20)



Question 3.3. (TCO 6) Yappy Company is considering a capital investment of $320,000 in additional equipment. The new equipment is expected to have a useful life of 8 years with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $25,000 and $65,000, respectively. Yappy requires a 10% return on all new investments.

Part (a): Compute each of the following.
1: Payback period
2: Net present value
3: Profitability index
4: Internal rate of return
5: Accounting rate of return
(b): Indicate whether the investment should be accepted or rejected. (Points : 30)



Question 4.4. (TCO 7) Roswell Company has budgeted sales revenue as follows for the next 4 months as follows.

February $150,000
March $120,000
April $105,000
May $165,000

Past experience indicates that 80% of sales each month are on credit and that collection of credit sales occurs as follows: 60% in the month of sale, 35% in the month following the sale, and 3% in the second month following the sale. The other 2% is uncollectible.

Prepare a schedule which shows expected cash receipts from sales for the month of May. (Points : 30)



Question 5.5. (TCO 8) Eastern Company’s budgeted and actual sales for 2009 were as follows.

Product Budgeted Sales Actual Sales
A 35,300 units at $2.00 per unit 32,700 units at $2.60 per unit
B 27,900 units at $5.00 per unit 29,200 units at $4.70 per unit

Part (a): Calculate the sales volume variance.
Part (b): Calculate the sales price variance.
Part (c): Calculate the total sales variance. (Points : 30)



Question 6.6. (TCO 9) Herbart Company gathered the following information on power costs and factory machine usage for the last 6 months.

Power Cost Factory Machine Hours
January $24,400 13,900
February 30,300 17,600
March 29,000 16,800
April 22,340 13,200
May 19,900 11,600
June 14,900 6,600

Using the high-low method of analyzing costs, answer the following questions and show computations to support your answers.

Part (a): What is the estimated variable portion of power costs per factory machine hour?
Part (b): What is the estimated fixed power cost each month?
Part (c): If it is estimated that 10,000 factory machine hours will be run in July, what is the expected total power cost for July? (Points : 30)


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Devry BUSN 278 Final Exam Latest

Best Devry BUSN 278 Final Exam Latest
Devry BUSN 278 Final Exam Latest



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