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ACCT 346 DeVry Entire Course

Annual fixed selling and

Annual fixed selling and administrative expense $80,000 (a) Prepare an income statement using full costing. (b) Prepare an income statement using variable costing. 6. (TCO 8) Leekee Shipyards has a new barnacle removing product for ocean going vessels. The company invests $1,200,000 in operating assets and plans to produce and sell 400,000 units per year. Leekee wants to make a return on investment of 20% each year. Leekee needs to know what price to charge for this product. Use the absorption costing approach to determine the markup necessary to make the desired return on investment based on the following information: Per Unit Total Direct Materials $ 2.00 Direct Labor $ 1.50 Variable Manufacturing Overhead $ 1.00 Fixed Manufacturing Overhead $ 100,000 Variable Selling and Administrative Expense $ 0.10 Fixed Selling and Administrative Expense $ 100,000 ACCT 346 DeVry Week 6 Quiz (Version 2) Question 1. Question : Which of the following costs is not relevant in decision making? Sunk cost Incremental cost Opportunity cost Differential cost Question 2. Question : Which of the following does not take the time value of money into account? Internal rate of return Net present value Payback period None of the above Question 3. Question : Which of the following is not a capital budgeting decision? Purchasing new equipment Replacing old equipment Producing a film project Planning for retirement Question 4. Question : Which of the following is an example of a sunk cost? Direct materials Variable overhead Equipment depreciation

Future cost Question 5. Question : A revenue that differs between alternatives is called a(n): Incremental revenue. Irrelevant revenue. Joint revenue. Opportunity revenue. Question 6. Question : Capital expenditure decisions are also called capital budgeting decisions. involve the acquisition of long-lived assets. have a major, long-term effect on a firm’s operations. All of the above are correct Question 7. Question : The rate of return that equates the present value of future cash flows to the investment outlay is the hurdle rate. internal rate of return. payback return. accounting rate of return. Question 8. Question : Which of the following is never considered in incremental analysis? Incremental revenue Sunk costs Incremental profit Differential costs Question 9. Question : Which of the following is often not a differential cost? Direct labor Direct material Variable manufacturing overhead Fixed manufacturing overhead Question 10. Question : The required rate of return used to calculate an investment’s net present value is related to the firm’s contribution margin. cost of capital. depreciation methods. fixed costs. ACCT 346 DeVry Week 8 Final Exam (Version 1) Page 1

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