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chapter 24
Analytics for Managerial
Decision Making
goals discussion goals achievement fill in the blanks multiple choice problems check list and key terms
Select the appropriate response.
In selecting among alternative courses of action, historical costs are generally not considered.
Which of the following is virtually impossible to measure in dollars?
sunk costs or qualitative factors
In a outsourcing decisions only relevant variable costs should be taken into account in the analysis.
With special order pricing, the goal is to produce items with the highest contribution margin per sales dollar.
In deciding whether to delete a particular department, the most important element is an analysis of the contribution margin. If the contribution margin for a particular department is positive, the unit should not be discontinued.
The contribution margin must be analyzed in terms of factors that limit its:
The evaluation of programs and projects that influence the financial performance of more than a single accounting period is called:
capital budgeting or master budgeting
In evaluating a capital expenditure proposal, management should identify and evaluate the amount of an investment, the periodic returns from an investment, and which rate of return?
highest rate of return acceptable to the company or lowest rate of return acceptable to the company
The collective cost of funds employed by a firm is referred to as the cost of capital.
Which interest concept considers interest computed on principal plus previously computed interest?
compound interest or simple interest
The present value of an amount to be received in the future is computed through a process called:
Individual present value factors may be computed from individual future value factors by computing the future value factor's:
accumulated interest or reciprocal
The present value of an annuity is equal to the sum of the present value of the individual payments.
The present value of an annuity to be received in years six through ten can be calculated by subtracting a certain amount from the present value factor for an annuity for periods one through ten. The amount of the subtracted factor is:
the
present value factor for an annuity that covers periods one through five
or
the present value factor for a single payment amount
related to year five
The net present value method requires the present value of an investment's cash inflows to be netted against the future value of the cash outflows.
Depreciation is ordinarily excluded from present value calculations because depreciation is of what nature?
In considering the impact of income taxes on cash flows, both revenues and expenses are likely to be affected.
Depreciation may impact after-tax cash flows in such a way as to produce a:
Another name for the internal rate of return computation is the:
project yield rate of return or time-adjusted rate of return
Which method measures the amount of time it takes to cover a project's initial cash investment?