The following information is available for four investment projects:
A discount rate of 12% is appropriate for all four projects. The organization is subject to capital rationing and wishes to prioritise the projects using the profitability index (PI).
Which project has the highest PI?
A cost centre manager's performance is monitored based on a comparison of actual and budgeted cost. A summary performance report for the latest period is shown below.
The actual costs include:
*$28,000 for allocated head office costs.
*$18,000 payment for a rental agreement entered into by the cost centre manager two years ago.
*$34,000 for depreciation.
What is the cost centre manager's controllable actual cost for the period?
Give your answer to the nearest $000.
LL produces an item, the Z, for which the demand curve is estimated to be:
P = 10 - 0.0001Q
where, P is the unit price in $ and Q is the annual sales volume in units;
Marginal revenue (MR) = 10 - 0.0002Q
The variable cost of producing the Z is $2 per unit. The annual fixed costs of production are $110,000.
What is the profit maximizing output level?
To which technique for dealing with risk and uncertainty do ALL of the following statements apply?
• It requires that only one factor is considered at a time.
• It identifies areas which are crucial to a project, which can then be monitored if the project is chosen.
• It does not provide an indication of the likelihood of any change in the factors.
• Following the calculation, it requires the exercising of judgement to decide whether to accept or reject a project.
A large supermarket is applying direct product profitability analysis to establish the profit earned by each of the products it sells.
Data for product P are as follows.
The shelf is stacked each time that all units are sold and there are no units of product P left unsold at the end of each day.
What is the direct product profit per unit of product P?
Give your answer to the nearest $0.01.
A project requires an initial investment of $50,000. It will generate positive cash flows for two years as follows.
The cost of capital is 12% per year.
What is the equivalent annual net present value of the project?
Give your answer to the nearest $10.
A manufacturing company is in the process of introducing just in time (JIT) and total quality management (TQM) into every aspect of its value chain.
Which TWO of the following are appropriate changes to make to the support activities in the organization's value chain?
Which of the following statements is TRUE about the activity based costing system when compared to absorption costing method?
The following calculation of the net present value (NPV) of a project has been produced.
By how much can the forecast revenue decrease before the project is not viable?
An organization employs a dual pricing basis for the transfer of components between its divisions. This means that:
