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The beginning finished goods inventory fro year 2 was 20% for year 2 sales.
The ending finished goods inventory for year 2 was 18% of year 3 sales.
What was the corporation’s inventory turnover for year 2?
a. 1.34 c. 3.03
b. 2.83 d. 3.13
3. Which of the following costing methods will yield the lowest
inventory value?
a. Absorption
b. Hybrid
c. Process
d. Variable
4. Each of the following periods is included when computing a firm’s
target cash conversion cycle, except the
a. 12.0%
b. 13.3%
c. 15.0%
d. 16.05
6. A supply curve illustrates the relationship between
Assume that all cash flows come at the end of the year.
7. What is the amount of the after tax-cash flows in year 2?
a. P140,000
b. P125,000
c. P98,000
d. P70,000
8. What is the net present value of the investment?
a. P175,000
b. P58,000
c. P1,135
d. (P12,340)
9. Limitations of an activity based costing system include which of the
following?
a. Control of overhead cost is enhanced
b. Activity-based costing systems are less reliable
c. The expense of obtaining cost data is relatively high
d. It eliminates arbitrary assignment of overhead costs
Items 10 and 11 are based on the following information:
Ethan, Inc. has seasonal demand for its products and management is
considering whether level production or seasonal production should be
implemented. The firm’s short term interest cost is 8%, and management
has developed the following information to make the decision:
Alternative 1 Alternative 2
Level Production Seasonal Production
Average Inventory P2,000,000 P1,500,000
Production Costs P6,000,000 P6,050,000
10. Which alternative should be accepted and how much is saved over
the other alternative?
a. Alternative 1 with P500,000 in savings
b. Alternative 2 with P50,000 in savings
c. Alternative 2 with P10,000 in savings
d. Alternative 1 with P10,000 in savings
11. At what rate of short-term interest rate would the two alternatives
have the same cost?
a. 6%
b. 9%
c. 10%
d. 12%
12. Jackson Co. is considering a project that will use 2,000 square feet
of storage space at one of its facilities to store used equipment. What
will determine Jackson’s opportunity cost?
a. P0 c. P144,000
b. P28,800 d. P120,000
14. Assume a firm is expected to pay a dividend of P5.00 per share this
year. The firm along with the dividend is expected to grow at a rate
of 6%. If the current market price of the stock is P60 per share, what
is the estimated cost of equity?
a. 8.3%
b. 6.0%
c. 14.3%
d. 12.0%
15. As a business owner you have determined that the demand for your
product is inelastic. Based upon this assessment you understand that