pg. 1
IVY SOFTWARE MBA PREPWORKS MANAGERIAL
ACCOUNTING EXAM 2024 COMPLETE 150
QUESTIONS AND CORRECT DETAILED ANSWERS
(VERIFIED ANSWERS) |ALREADY GRADED A+||
BRAND NEW!
If the hurdle rate used to discount a stream of cash flows is raised, the IRR of the cash
stream will:
- always increase
- always decrease
- not change
- increase if the NPV is negative or decrease if the NPV is positive - Correct Answer -
- not change.
The IRR is calculated from the undiscounted cash flows. The discount rate chosen has absolutely no bearing on IRR.
Residual cash flows are estimated: - Correct Answer - when the useful lives of
alternatives differ.in order to quantify the cash flows of an investment beyond the chosen time horizon.they are entered into cash flow forecasts in recognition of the fact that an investment cannot be evaluated into perpetuity. When comparing two investments with unequal lives, the residual value of the longer-lived asset is assumed to be realized at the termination of the shorter-lived asset, in this way assuring comparability of the investments.
If an investment's IRR is higher than the firm's chosen hurdle rate, then the investment
- has a negative NPV
- is of greater risk than the overall risk of the firm
- should be qualitatively considered before selection 1 / 3
pg. 2
- A & B
- A B & C - Correct Answer - C) should be qualitatively considered before selection
If the IRR exceeds the hurdle rate, the NPV is Positive Negative Doesn't matter - Correct Answer - NPV is positive when IRR exceeds hurdle rate. If IRR exceeds hurdle rate, no inference is made as to the relative risk of the investment or the firm.
Which of the following is most useful to management in exercising their control function?
- budget
- Performance Report
- Annual Report
- Income Tax Report - Correct Answer - Performance report.
Performance report is - Correct Answer - shows the budgeted numbers, the actual numbers, and the variance.
Annual report - Correct Answer - published for external users of the financial statements such as creditors and stockholders
In reviewing the balance sheet of an unknown company, which item would you look for to determine whether or not the unknown company is a manufacturing company?Cash Accounts receivable Inventory Accounts payable - Correct Answer - Inventory
- / 3
pg. 3 As the production level increases, the cost per unit decreases for a fixed cost (true or false) - Correct Answer - True. if the fixed cost is $100,000 and the units of production increase from 0 to 10,000 units, you are dividing $100,000 by a larger number of units.Since the numerator is fixed and the denominator gets larger the CPU decreases.
In the long run, all fixed costs become variable (true or false) - Correct Answer - true.
Lucius Smith is an assembler for a chair manufacturer. normally he spends one hour (at $25/hour) for each chair he assembles. after assembling 500 chairs he wants to spend 10 minutes more per chair to improve quality. Management approves. This will change
the:
fixed cost line variable cost line semi variable cost semi fixed cost - Correct Answer - variable cost. The slope of the variable cost line is changed from $25/unit to $25 (1 x 10/60) = $29.17/unit. this is a variable cost and has nothing to do with the other costs listed.
The standard for direct materials for product A is 6 square feet at $10 per square foot. If a firm produces 100 units of product A and uses 600 square feet at $11 per square foot
the materials price variance is:
$660 unfavorable $660 favorable $600 unfavorable $600 favorable - Correct Answer - $600 unfavorable
The difference between the actual overhead cost and the flexible budget level of
overhead for actual production is called:
overhead volume variance controllable overhead variance budget variance none of the above - Correct Answer - Controllable overhead variance
- / 3