QuestionQuestion 1Which of the following best describes an “opportunity cost”?

Question 1
Which of the following best describes an “opportunity cost”?

The distribution of all products to be sold

Costs that were incurred in the past and cannot be changed

Benefits foregone by not choosing an alternative course of action

Expected future costs that differs among alternatives

Question 2
What is the name given to choosing among different alternative investments due to limited resources?

Capital rationing

Resource allocation

Capital investing

Resource rationing

Question 3
The practice of directing executive attention to important deviations from budgeted amounts is called management by:

analysis.

exception.

objective.

control.

Question 4
The Mad Hatter Corporation reported the following income statement and balance sheet amounts and additional information for the end of the current year.

End of current year End of prior year
Net sales revenue (all credit) $ 1,200,000
Cost of goods sold $ 725,000
Gross profit $ 475,000
Selling/general expenses $ 280,000
Interest expense $ 42,000
Net Income $ 153,000

Current assets $ 112,000 $ 82,000
Long-term assets $ 505,000 $ 440,000
Total assets $ 617,000 $ 522,000
Current liabilities $ 57,000 $ 52,000
Long-term liabilities $ 275,000 $ 245,000
Common stockholders’ equity $ 415,000 $ 225,000
Total liabilities and stockholders’ equity $ 617,000 $ 522,000
Inventory and prepaid expenses account for $30,000 of the current year’s current assets.
Average inventory for the current year is $25,000.
Average net accounts receivable for the current year is $45,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $37,000.
The market price per share of common stock is $20.

What is the earnings per share for the current year?

$3.83

$4.64

$10.38

$5.23

Question 5
Return on investment and revenue growth would be examples of:

financial perspective.

customer perspective.

internal business perspective.

learning and growth perspective.

Question 6
Glow Sticks Corporation manufactures and sells glow-in-the-dark necklaces for $10 each. The company has the capacity to produce 25,000 necklaces in a year, but is currently producing and selling 20,000 necklaces per year. The company currently is incurring the following costs at its current production level of 20,000 necklaces:

Variable manufacturing costs $ 60,000
Fixed manufacturing costs $ 90,000
Variable selling and administrative costs $ 75,000
Fixed selling and administrative costs $ 50,000
An amusement park is interested in purchasing the excess capacity of 5,000 necklaces if it can receive a special price. This special order would not affect Glow Sticks Corporation’s regular sales or its cost structure. Glow Sticks Corporation’s profits would increase from this special order if the special order price per necklace is greater than:

$13.75.

$6.75.

$5.40.

$7.50.

Question 7
Roberts Corporation has an ROI of 23%, total assets of $5,250,000, and current liabilities of $950,000. What is Roberts Corporation’s operating income?

$4,130,435

$218,500

$1,207,500

$22,826,087

Question 8
The following information relates to Bonny Unlimited for the past two years.

Account Current year Prior year
Net sales (all credit) $250,000 $180,000
Cost of goods sold $115,000 $110,000
Gross profit $135,000 $ 70,000
Income from operations $ 32,000 $ 30,000
Interest expense $ 4,000 $ 7,000
Net income $ 24,000 $ 18,000
Cash $ 16,000 $ 14,000
Accounts receivable, net $ 20,000 $ 31,000
Inventory $ 52,000 $ 44,000
Prepaid expenses $ 2,000 $ 1,000
Total current assets $ 90,000 $ 90,000
Total long-term assets $100,000 $120,000
Total current liabilities $ 60,000 $ 90,000
Total long-term liabilities $ 22,000 $ 78,000
Common stock, no par,
2,000 shares, market value $90 per share $ 40,000 $ 40,000
Retained earnings $ 68,000 $ 2,000
What is the current ratio for the current year?

1.00

1.50

2.40

7.00

Question 9
Gutierrez Company budgeted 10,000 pounds of direct materials costing $21.50 per pound to make 5,000 units of product. The company actually used 10,200 pounds of direct materials costing $24.00 per pound to make the 5,000 units. What is the direct materials efficiency variance?

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