#7 The required rate of return used to calculate an investment’s net present val
ID: 2578516 • Letter: #
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#7 The required rate of return used to calculate an investment’s net present value is related to the firm’s A. contribution margin. x B. cost of capital. C. total assets. D. Price/Earnings ratio. #8 A company is trying to decide whether to keep or drop the organic foods department in its grocery store. If organic foods are dropped, the manager will be laid off. What is the manager's salary in relation to the decision to keep or drop the department? A. A variable cost and therefore relevant B. Avoidable and therefore incremental C. Sunk and therefore not relevant D. A fixed cost and therefore not relevant #9 The following information relates to Ajax Widgets during the year. There was no beginning inventory. Units produced 11,000 Units sold 10,000 Units in ending inventory 1,000 Fixed manufacturing overhead $220,000 How much fixed manufacturing overhead will be expensed during the year (included in Cost of Goods Sold) using full costing? A. $220,000 B. $200,000 C. $20,000 D. $10,000 #10 If the required rate of return is greater than the internal rate of return of a potential investment, the company should judge the investment as acceptable. A. This is a True statement B. This is a False statement C. Not enough information provided. #11 The basic concept involved in time value of money calculations is that A. it is better to receive a dollar in the future than to receive a dollar today B. incremental revenues must exceed incremental costs. C. it is better to receive a dollar today than to receive a dollar in the future. D. it can only be applied to positive cash flows #7 The required rate of return used to calculate an investment’s net present value is related to the firm’s A. contribution margin. x B. cost of capital. C. total assets. D. Price/Earnings ratio. #8 A company is trying to decide whether to keep or drop the organic foods department in its grocery store. If organic foods are dropped, the manager will be laid off. What is the manager's salary in relation to the decision to keep or drop the department? A. A variable cost and therefore relevant B. Avoidable and therefore incremental C. Sunk and therefore not relevant D. A fixed cost and therefore not relevant #9 The following information relates to Ajax Widgets during the year. There was no beginning inventory. Units produced 11,000 Units sold 10,000 Units in ending inventory 1,000 Fixed manufacturing overhead $220,000 How much fixed manufacturing overhead will be expensed during the year (included in Cost of Goods Sold) using full costing? A. $220,000 B. $200,000 C. $20,000 D. $10,000 #10 If the required rate of return is greater than the internal rate of return of a potential investment, the company should judge the investment as acceptable. A. This is a True statement B. This is a False statement C. Not enough information provided. #11 The basic concept involved in time value of money calculations is that A. it is better to receive a dollar in the future than to receive a dollar today B. incremental revenues must exceed incremental costs. C. it is better to receive a dollar today than to receive a dollar in the future. D. it can only be applied to positive cash flowsExplanation / Answer
8)
Costs that can be avoided by taking alternative course of actions are called avoidable costs. Here, manager is paid salary i.e fixed. So it is avoidable fixed costs. These are relevant should be considered for decision making.
Hence, correct option is B. Avoidable and therefore incremental.
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