1.Which of the following is an example of direct labor?a. chef in a restaurantb. janitor in a production plantc. security guard for the factoryd. management accountant2.If fixed costs increase, the breakeven point in units willa. increaseb. decreasec. remain the samed. remain the same; however, contribution per unit will decrease3.Which of the following is false?a. favorable labor efficiency variance could result from using higher quality materials that result in fewer inspections.b. a favorable labor rate variance could result from lower wage workers quittingc. a favorable materials price variance could result from purchasing identical materials from another supplier at a lower priced. an unfavorable materials usage variance could result from not efficiently utilizing raw materials, thus causing wastee. all of these are false.The manager of Alpha Division projects the following for next year:Sales $100,000Operating income $30,000Operating assets $200,000The manager can invest in an additional project that would require $30,000 investment in additional assets and would generate $4,200 of additional income. The companyâs minimum rate of return is 12%4.What is the residual income for Alpha Division without the additional investment?a. $30,000b. $24,000c. $6,600d. $4,200e. $6,000Color Pro uses part 87 a in the production of color printers. Unit manufacturing costs of part 87a are:Direct materials $8.00Direct labor 2Variable overhead 1Fixed overhead 4ColorPro uses 100,000 units of 87a per year. Filbert Company has offered to sell ColorPro 100,000 units of 87a per year for $12.00. Fixed overhead is unavoidable.5. Should ColorPro make or buy the part?a. make the part because it will save $100,000 over buying itb. buy the part because it will save $100,000 over making itc. make the part because it will save $1,100,000 over buying itd. buy the part because it will save 1,100,000 over making ite. buy the part because it will save $300,000 over making it6.Now suppose that ColorPro discovers that other costs will increase by $7,000 per year if the component is purchased rather than made internally. Should ColorPro make or buy the part?a. make the part because it will save $100,000 over buying itb. buy the part because it will save $100,000 over making itc. make the part because it will save $107,000 over buying itd. buy the part because it will save $107,000 over making ite. make the part because it will save $10,000 over buying it7.A firm is evaluating a project that has a net present value of $0 when a discount rate of 8 percent is used. A discount rate of 6 percent will result ina. negative net present valueb. positive net present valuec. net present value of $0d. The question cannot be answered based upon the information provided.8.In calculating net cash from operating activities using the indirect method, an increase in accounts receivable during a period isa. deducted from net incomeb. added to net incomec. ignored because it does not affect incomed. ignored because it does not affect expenses9.In vertical analysis, line items on the income statement are generally expressed as a percentage ofa. salesb. net incomec. total assetsd cost of goods sold10. Cash flows from operating activities, as reported on the statement of cash flows, would include:a. receipts from the sale of investments.b. net incomec. payments of dividendsd receipts from the issuance of common stock
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