Question 1

Austin Manufacturing, which is subject to a 40% income tax rate, had the following operating datafor the period just ended. CMA-page652-image516 Management plans to improve the quality of its sole product by (1) replacing a component that costs$3.50 with a higher-grade unit that costs $5.50, and (2) acquiring a $180,000 packing machine. Austinwill depreciate the machine over a 10-year life with no estimated salvage value by the straight-linemethod of depreciation. If the company wants to earn after-tax income of $172,800 in the upcomingperiod, it must sell

Options :

A : 19,300 units.

B : 21,3l6units.

C : 22,500 units.

D : 23,800 units.

Answer: C

Question 2

Which of the following is a true statement about packaging?

Options :

A : A customer ordinarily will not pay more for a better package

B : The package advertises the firm’s and brand’s image

C : Packaging identifies and describes the product and gives usage instructions

D : The package only provides the benefits associated with shipping and product protection

Answer: B

Question 3

What happens to the price of a three-year $1 .000 bond with an 8% coupon when market interestrates change from 8% to 6%?

Options :

A : A price increase of $7.68.

B : A price decrease of $7.68.

C : A price increase of $53.84.

D : . A price decrease of $53.84.

Answer: C

Question 4

Zero-based budgeting forces managers to

Options :

A : Estimate a product’s revenues and expenses over its expected life cycle.

B : Prepare a budget based on historical costs.

C : Formulate s budget by objective rather than function.

D : Justify all expenditures at the beginning of every budget period.

Answer: D

Question 5

A manufacturing company is attempting to implement a just-in-time(JIT)purchase policy system bynegotiating with its primary suppliers to accept long-term purchase orders which result in morefrequent deliveries of smaller quantiteies of raw materials.if the JIT purchase policy is successful inreducing the total inventory costs of the manufacturing company,which of the followingcombinations of cost changes would be most likely to occur?Cost category Cost categoryTo increase to decrease

Options :

A : Purchasing costs Stockout costs

B : Purchasing costs Quality costs

C : Quality costs Ordering costs

D : Stockout costs Carrying costs

Answer: C

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