GB519: Measurement and Decision Making quiz 4

Relevant costs.
Prior period operating costs.
Any opportunity costs.
The strategic, competitive environment of the firm.

These costs are recorded routinely by cost accounting systems.
These costs relate to the benefit lost or foregone when a chosen option (course of action) precludes the benefits from an alternative option.
These costs are generally deductible for federal income tax purposes.
In terms of most short-run decisions, they are irrelevant.

Evaluate performance.
Specify the criteria and identify the alternative actions.
Select and implement the best course of action.
Perform relevant and strategic cost analysis.
Review the audit report.

Gross profit per unit of product.
Contribution per unit of scarce resource.
Value-stream costing.
Relevant cost pricing.
The contribution income statement.

Direct labor.
Variable overhead.
Fixed overhead that will be avoided if the part is bought from an outside vendor.
Fixed overhead that will continue even if the part is bought from an outside vendor.

Depends on whether the company is operating at or below the breakeven point.
Depends on whether the company is operating at or below normal volume.
Involves an analysis of avoidable costs.
Should utilize absorption (i.e., full) costing.
Should consider an allocation of corporate headquarter expenses to the unit in question.

It assumes cash proceeds during the life of a project can be reinvested to earn the same rate of return as the weighted-average cost of capital.
Unlike the NPV method, it assumes only a single discount rate.
IRRs of multiple projects are additive (that is, can be added together).
It can be used to make optimal decisions regarding mutually exclusive investment projects.
It makes it easy to incorporate multiple costs of capital.

A basic objective underlying capital budgeting is to select assets that will earn a satisfactory return.
Capital budgeting is the process of identifying, evaluating, selecting, and controlling long-term investment projects.
Capital budgeting is based on precise estimates of future events.
Capital budgeting involves estimating the revenues and costs of each proposed project, evaluating their merits, and choosing those worthy of investment.

The project initiation stage and final disposal stage only.
All stages: initiation, operation, and final disposal of the project.
Only the project initiation stage and the operation stage.
The project operation stage only.
The project disposal stage only.

Net proceeds from the sale plus the after-tax gain on the sale.
Net proceeds from the sale less the after-tax gain on the sale.
Net proceeds from the sale plus the taxes paid on the gain.
Net proceeds from the sale less the taxes paid on the gain.

They provide feedback to managers regarding the soundness of their decision-making.
They encourage managers to build slack into capital investment proposals.
They are sometimes difficult to implement in practice.
They may be cost-prohibitive to accomplish.
They help keep actual projects on target (e.g., by limiting project managers from diverting project funds, without authorization, to other uses).

NPV facilitates comparisons of mutually exclusive projects requiring different amounts of initial investments.
NPV facilitates comparisons among mutually exclusive projects that have the same useful life but different initial outlays.
NPV can be used to determine an optimum capital budget under conditions of capital rationing, while IRR cannot.
NPV is relatively intuitive.
IRR relies on discounted cash-flow analysis, while NPV does not.

2.5 years.
2.7 years.
3.1 years.
3.6 years.

($270,480).
$63,936.
$109,428.
$154,920.

$5,000.
$20,000.
$22,000.
$25,000.