Question 1

Firefighters risk serious and potentially fatal accidents whenever they attend an incident.
Which of the following statements is correct?

Options :

A : The risk of serious accidents should be accepted in all but the most extreme incidents.

B : The risk of serious accidents should always be accepted because that is what firefighters are paid to do.

C : The risk of serious accidents should be avoided because the risk has a high probability and a high impact.

D : Every incident should be the subject of a detailed and thorough risk assessment before the firefighters are permitted to respond.

Answer: A

Question 2

A very large organization is financed by both debt and equity. It evaluates all projects on the basis of their net present value (NPV) using an organization wide weighted average cost of capital as the discount rate.
For a small project, which TWO of the following would affect the project's cash flows AND the discount rate?

Options :

A : Taxation rates

B : Inflation rates

C : Depreciation rates

D : Changes in working capital

E : The project-s terminal value

Answer: A,B

Question 3

When considering a capital investment, relevant costs for decision making have which THREE of the following features?

Options :

A : They are future costs.

B : They are committed costs.

C : They are incremental costs.

D : They are unavoidable costs.

E : They are cash flows.

Answer: A,C

Question 4

One of an investment centre's products is sold on an external market. Output is limited because the specialist machine that manufactures the product is operating at full capacity.

Current data for the product are as follows.

Options :

A : $21,400

B : $17,800

C : $23,900

D : $26,160

Answer: A

Question 5

Which of the following statements is TRUE about the activity based costing system when compared to absorption costing method?

Options :

A : ABC is easier to administer than an absorption costing system

B : ABC will be less detailed than an absorption costing system

C : ABC will provide more accurate overhead allocation than absorption costing

D : ABC will cost less to administer than an absorption costing system

Answer: C

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