Question : 21) Which of the following represents a qualitative factor? A) any : 1185984

 

21) Which of the following represents a qualitative factor?

A) any nonfinancial factor

B) historical costs

C) relevant costs

D) the timing of variable costs

E) an outcome that cannot be measured in numerical terms

 

22) When making decisions, it is best to use

A) average costs.

B) fixed costs that would be incurred.

C) unit cost, rather than total cost.

D) variable costs that would be incurred.

E) relevant costs.

 

23) Sunk costs

A) are relevant.

B) are differential.

C) have future implications.

D) are ignored when evaluating alternatives.

E) are evaluated to determine if they are relevant or not evaluating alternatives.

24) A computer system installed last year is an example of a(n)

A) sunk cost.

B) relevant cost.

C) differential cost.

D) avoidable cost.

E) opportunity cost.

 

25) Which of the following costs are never relevant in the decision-making process?

A) fixed costs

B) historical costs

C) relevant costs

D) variable costs

E) opportunity costs

 

26) Jansen Industries is considering replacing a machine that is presently used in its production process. The following information is available:

 

 

Old Machine

Replacement

Machine

Original cost

$25,000

$35,000

Remaining useful life in years

1

5

Current age in years

5

0

Book value 

$5,000

 

Current disposal value in cash

$3,000

 

Future disposal value in cash (in 5 years)

$0

$2,000

Annual cash operating costs

$7,000

$4,000

 

Which of the information provided in the table is irrelevant to the replacement decision?

A) the annual operating cost of the old machine

B) the original cost of the old machine

C) the current disposal value of the old machine

D) the future disposal value of the replacement machine

E) the remaining useful life of the old machine

27) Expected value may be defined as

A) the probability that each outcome will occur.

B) the probability that each outcome will not occur.

C) the expected future benefit of selecting one alternative over another.

D) the average of all possible outcomes.

E) the weighted average of the outcomes with the probability of each outcome serving as the weight.

 

28) What would be the expected monetary value for the following data using the probability method?

 

Probability

Cash Inflows

0.20

$100,000

0.30

$80,000

0.15

$60,000

0.35

$0

 

A) $20,000

B) $94,000

C) $80,000

D) $53,000

E) $30,000

 

29) Lobster Liquidators will make $500,000 if the fishing season weather is good, $200,000 if the weather is fair, and would actually lose $50,000 if the weather is poor during the season. If the weather service gives a 40% probability of good weather, a 25% probability of fair weather, and a 35% probability of poor weather, what is the expected value of the profit for Lobster Liquidators?

A) $500,000

B) $232,500

C) $267,500

D) $200,000

E) $217,000

Patrick Ross has three booth rental options at the county fair where he plans to sell his new product. The booth rental options are:

 

Option 1:  $1,000 fixed fee, or

Option 2:  $750 fixed fee + 5% of all revenues generated at the fair, or

Option 3:  20% of all revenues generated at the fair.

 

The product sells for $37.50 per unit. He is able to purchase the units for $12.50 each.

 

30) Which option should Patrick choose to maximize income assuming there is a 40% probability that 70 units will be sold and a 60% probability that 40 units will be sold?

A) Options two and three are equivalent.

B) All options maximize income equally.

C) Option one

D) Option two

E) Option three