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NEW QUESTION 68
Which TWO of the following statements are correct?
- A. Loss leadership pricing is appropriate for a new product which is not part of a range of products.
- B. It is worthwhile for a company to sell further units when the marginal revenue is greater than the marginal cost.
- C. Price is the only factor affecting the demand for products and services.
- D. Demand functions can be predicted accurately and the relationship between price and quantity demanded is always constant.
- E. Premium pricing is possible when there is a measure of product or service differentiation.
Answer: B,E
NEW QUESTION 69
SQ has the opportunity to invest in project X. The net present value for project X is $12,600. Cash inflows occur in years 1, 2 and 3. The company's cost of capital is 14%.
Calculate the annualized equivalent annuity of project X.
Give your answer to the nearest whole $.
Answer:
Explanation:
$5429
NEW QUESTION 70
The manager of Ice Sculpting Co. believes that too much material is being wasted during downtime. She researched, and found throughput accounting to be an adequate alternative. However, she wasn't sure if all that she read was accurate.
Which of the following statements are TRUE when using Throughput Accounting? Select ALL that apply.
- A. Not all sales equal to profit
- B. Stocking up on inventory is bad for business.
- C. If there is no demand, then there should be no production.
- D. All costs, except materials, are considered fixed.
- E. Departments should be operating at full capacity regardless of bottlenecks
Answer: B,C,D
NEW QUESTION 71
SDF is a newly-established production company that is experiencing high staff turnover in its factory.
The production department is studying the manufacturing process and its associated learning curve.
Which of the following statements is correct?
- A. SDF's staff turnover will disrupt the observation and measurement of the learning curve.
- B. SDF can use the learning curve to determine labor budgets for the remainder of the first year of operation.
- C. SDF's rapid staff turnover means that knowledge of the learning curve has little value.
- D. SDF's staff turnover will affect the learning curve.
Answer: A
NEW QUESTION 72
Which of the following factors would prevent a learning curve being observed for a task?
- A. The task has a significant manual element.
- B. The task has a significant automated element.
- C. The task is repetitive.
- D. There is a low rate of labor turnover of the staff carrying out the task.
Answer: B
NEW QUESTION 73
A company has invested $500,000 in developing a new product and requires a return of 12% on this investment.
The company has researched the market and has set the selling price for the new product at $300 per unit. At this price, sales volume for next year is forecast to be 500 units. The forecast unit cost is $210.
What is the target cost gap per unit for the coming year?
Give your answer to the nearest whole $.
Answer:
Explanation:
$30
NEW QUESTION 74
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.
Answer:
Explanation:
$0.34
NEW QUESTION 75
The performance report for the production manager of a company for the last month included the following.
1,000 direct labor hours were worked at a basic rate of pay of $10 per hour. 200 of these hours were worked during overtime for which a 30% overtime premium was paid. 80 of these overtime hours were to fulfill a customer order that had originally been planned for manufacture next month. The sales manager had agreed to bring forward the delivery of this order at the request of the customer. The remaining overtime hours were due to unexpected inefficiency of the workforce; this has been traced to poor supervision by a junior manager.
Material costs included the following:
$5,300 of material A. Material A is a commodity and, due to changes on the global market, the actual unit cost of this material for last month was 6% higher than had been expected
$5,250 of material B. The usage of material B last month was 5% higher than it should have been due to faulty workmanship on the production line.
What is the total value of the above costs that was controllable by the production manager?
- A. $20,360
- B. $20,910
- C. $20,610
- D. $19,810
Answer: C
NEW QUESTION 76
Three years ago the large number of faulty products being returned by its customers resulted in a company adopting total quality management (TQM). The company has increased expenditure on staff training and product inspections. This has resulted in a reduction in the number of faulty products returned.
Which of the following statements is correct?
- A. Spending more on conformance costs has resulted in a reduction in external failure costs.
- B. Spending more on conformance costs has resulted in a reduction in internal failure costs.
- C. Spending more on non-conformance costs has resulted in a reduction in conformance costs.
- D. Spending more on prevention costs has resulted in a reduction in appraisal costs.
Answer: A
NEW QUESTION 77
In an organization's transfer pricing system the selling division and the purchasing division each record a different price for the same transaction.
This is known as a:
- A. Two part tariff system.
- B. Full cost pricing system.
- C. Dual pricing system.
- D. Marginal cost plus pricing system.
Answer: C
NEW QUESTION 78
SkillWeave are an international clothing manufacturer known for their durable and high quality products. Recently their biggest market in the world's premier customs union has had some economic volatility. This has resulted in the currency of this market being very unstable and difficult to predict in terms of whether it will retain, lose or gain relative value to domestic currency.
Which of the following is an effective risk reduction technique for SkillWeave's clothing sales to this region?
- A. Buy parts domestically to avoid using the region's currency
- B. Temporarily stop producing for and selling cars to the region
- C. Pay part suppliers from the region in domestic currency, generated from sales in the region
- D. Pay part suppliers from the region in their currency, generated from sales in the region
Answer: D
NEW QUESTION 79
Which of the following correctly defines the expected value of a project?
- A. The present value of the positive cash flows that the project will generate.
- B. The most likely amount of incremental wealth that the project will generate.
- C. The weighted average of the possible outcomes of the project.
- D. The actual amount of incremental wealth that the project will generate.
Answer: C
NEW QUESTION 80
A long established organization has recognised the need to make urgent changes to the way it operates in order to remain competitive. The organization wishes to dramatically improve its performance through a fundamental rethinking and radical redesign of its existing activities.
Which of the following techniques should be used to achieve this?
- A. Kaizen costing
- B. Process innovation
- C. Business process re-engineering
- D. Functional analysis
Answer: C
NEW QUESTION 81
An investment appraisal has identified that a project has a positive net present value when discounted at the company's cost of capital. If the cost of capital is now increased, indicate whether each of the following appraisal measures will increase, decrease or stay the same.
Answer:
Explanation:
NEW QUESTION 82
A machine requires an initial investment of $500,000. The net present value (NPV) of the investment in the machine is $36,500.
Which of the following statements is correct in relation to the sensitivity of the investment?
- A. The NPV can decrease by no more than 13.7% before the project is not viable.
- B. The initial investment can increase by no more than 13.7% before the project is not viable.
- C. The initial investment can increase by no more than 7.3% before the project is not viable.
- D. The NPV can decrease by no more than 7.3% before the project is not viable.
Answer: C
NEW QUESTION 83
A company comprises several divisions.
One of these divisions was originally expected to earn an operating profit next year of $800,000 on net assets of $4 million.
However, the divisional manager is considering investing in a project that would generate a project return on investment (ROI) of 38% on additional net assets of $500,000.
What would be the divisional ROI next year if the project was implemented?
Give your answer to the nearest percentage.
Answer:
Explanation:
22 %
NEW QUESTION 84
Which TWO of the following are reasons why cost-based approaches to transfer pricing are often used in practice?
- A. The transferring division will want to maximize its profits.
- B. The buying division will want to maximize its profits.
- C. The approach allows the organization to cover all the costs.
- D. Because there is often no external market for the product that is being transferred.
- E. Because the external market is imperfect.
Answer: D,E
NEW QUESTION 85
A company is considering the replacement of its outdated information system.
Which of the following are appropriate approaches for the company to take to assess the potential qualitative benefits of a replacement information system?
(1) Ignore the qualitative benefits that may arise because there is too much subjectivity involved in their assessment.
(2) Attempt to attribute monetary values to each of the qualitative benefits identified.
(3) Acknowledge the existence of qualitative benefits and attempt to assess them in a reasonable manner that is acceptable to all parties.
(4) Attempt to express qualitative benefits in general terms linked to a hierarchy of organizational objectives.
- A. (2), (3) and (4) only
- B. (1), (2) and (3) only
- C. (1), (2) and (4) only
- D. (1), (3) and (4) only
Answer: B
NEW QUESTION 86
Company S has two divisions, X and Y. Division X transfers 50,000 component units to Division Y each quarter. The market price of the component is $20. Division X's variable cost is $10 per unit and its fixed cost is $150,000 each quarter.
What price would be credited to Division X for each component that it transfers to Division Y under:
two-part tariff pricing (where the two divisions have agreed that the fixed fee will be $100,000); and dual pricing (based on market price and marginal cost).
- A. Two-part tariff pricing = $13
Dual pricing = $22 - B. Two-part tariff pricing = $10
Dual pricing = $20 - C. Two-part tariff pricing = $12
Dual pricing = $18 - D. Two-part tariff pricing = $10
Dual pricing = $22
Answer: B
NEW QUESTION 87
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?
- A. 35.6%
- B. $21,380 in total
- C. $20,000 per year
- D. 7.2%
Answer: D
NEW QUESTION 88
A senior manager is concerned about the dysfunctional consequences of a company's current approach to budget preparation. The senior manager has discovered that budget holders are carrying budgetary slack forward from one period to the next without this being identified or challenged.
Which of the following approaches to budget preparation is the company using?
- A. Zero-based budgeting
- B. Activity-based budgeting
- C. Incremental budgeting
- D. Beyond budgeting
Answer: C
NEW QUESTION 89
A company is investing in a huge diversification project. The plan is to develop and sell a whole new product line that they have never sold before. They've already started a massive marketing campaign for this new product line and they are getting good feedback in their market research.
They've had to use debt funding in order to finance the project, but they hope that the returns will be worth the investment and restructuring. If they are successful they will be a step ahead of all their competitors and offer something none of them can.
What is the risk appetite of this company?
- A. Impossible to say
- B. Risk seeking
- C. Risk neutral
- D. Risk averse
Answer: B
NEW QUESTION 90
A manufacturing company has recently introduced a Total Quality Management (TQM) system. The company has invested heavily in the education and training of its staff, in addition to implementing new product design engineering. There is a plan to sample units from each batch of products manufactured to test for errors, although this has not yet been implemented due to budget constraints.
The company is experiencing high levels of customer complaints, with many faulty units being returned by the customer for refund or replacement. Sales revenue has fallen recently, mainly due to negative press coverage linked to dissatisfied customers.
Select the statement MOST likely to apply.
- A. The high level of internal failure costs is the result of a lack of expenditure on prevention costs.
- B. The high level of internal failure costs is the result of a lack of expenditure on appraisal costs.
- C. The high level of external failure costs is the result of a lack of expenditure on appraisal costs.
- D. The high level of external failure costs is the result of a lack of expenditure on prevention costs.
Answer: C
NEW QUESTION 91
The net present value of the cost of operating a machine for the next 4 years is £6,340. The discount rate used is 10%.
What is the equivalent annual cost and the present value of the cost in perpetuity of operating this machine?
Use discount factors to 3 decimal places.
- A. Equivalent annual cost = £92,825
Present value of cost in perpetuity = £9,283 - B. Equivalent annual cost = £20,000
Present value of cost in perpetuity = £2,000 - C. Equivalent annual cost = 9,283
Present value of cost in perpetuity = £92,825 - D. Equivalent annual cost = £2,000
Present value of cost in perpetuity = £20,000
Answer: D
NEW QUESTION 92
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P2 exam questions from Actual4Exams dumps: https://www.actual4exams.com/P2-valid-dump.html (205 Q&As)