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Test your basic knowledge |
Capital Budgeting
Start Test
Study First
Subject
:
business-skills
Instructions:
Answer 25 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Costs of a single process or a series of processes that simultaneously produce two or more products of significant value.
Opportunity Cost
Financial Planning Process
Relevant Range
Joint Product Costs
2. Involves taking the operating plans and developing proforma financial statements - forecasting financing needs - and measurement (control) criteria.
Avoidable Cost
Incremental Cost
Corporate Strategies
Financial Planning Process
3. Percentage of debt - preferred stock - and common stock used for financing the firm's assets.
Opportunity Cost
Sales Forecast
Capital Structure
Mission Statement
4. A cost that differs between alternatives - also known as incremental cost or relevant cost.
Opportunity Cost
Differential Cost
Sunk Cost
Financial Planning Process
5. A relevant cost in decision making but one for which information might not be available.
Avoidable Cost
Mission Statement
Imputed Cost
Sunk Cost
6. Broad - long-range plans such as developing new technologies in a particular field.
Avoidable Cost
Mission Statement
Corporate Strategies
Imputed Cost
7. The cash flow actually available for distribution to investors after the firm has made all necessary investments in fixed assets and permanent working capital necessary to support on-going operations.
Relevant Range
Proforma Financial Statements
Free Cash Flow
Financial Planning Process
8. A cost that has already occurred and is not affected by a capital budgeting decision.
Sunk Cost
Operating Plans
Differential Cost
Joint Product Costs
9. The dollar value of assets that is required to create a dollar of sales
Incremental Cost
Capital Intensity Ratio
Mission Statement
Outsourcing
10. The book value of old equipment is not relevant because you cannot change what has already been spent - current disposal price of old equipment is relevant since future cash flows will differ among alternatives - the gain or loss on sale of equipme
Outsourcing
Free Cash Flow
Sunk Cost
Relevant cost for decision making
11. The strategic use of outside resources by organizations to perform tasks to produce products traditionally handled by or produced using internal staff and resources.
Avoidable Cost
Outsourcing
Steps to use in the decision-making process
Imputed Cost
12. The plans used to implement the corporate strategy involving the identification of the responsibility for implementation - specific tasks to be accomplished - and revenue and costs targets - among other things.
Capital Structure
Capital Intensity Ratio
Constraint
Operating Plans
13. A net cash inflow that will be lost if a particular course of action under consideration is taken as compared to another possibility.
Split-Off Point
Capital Structure
Opportunity Cost
Constraint
14. A statement defining the general purpose o the company.
Proforma Financial Statements
Mission Statement
Imputed Cost
Opportunity Cost
15. The point in the manufacturing process where the joint products produced become individually identifiable.
Split-Off Point
NOPAT (net operating profit after taxes)
Opportunity Cost
Imputed Cost
16. The projection of both volume and dollar value of sales for a future period.
Sales Forecast
Historic Cost
Avoidable Cost
Outsourcing
17. The profit a firm would make id there were no debt and no non-operating assets.
NOPAT (net operating profit after taxes)
Historic Cost
Mission Statement
Common Cost
18. Projected financial statements based on a given set of assumptions.
Capital Structure
Proforma Financial Statements
Common Cost
Capital Intensity Ratio
19. A cost that is incurred to support a number of activities and cannot be directly traced to any of them
Capital Structure
Common Cost
Relevant cost for decision making
Avoidable Cost
20. Limits within which the volume of activity can vary and cost relationships still remain valid.
Proforma Financial Statements
Constraint
Steps to use in the decision-making process
Relevant Range
21. A limited resource that limits an organization's ability to produce enough to satisfy demand
Split-Off Point
Relevant cost for decision making
Corporate Strategies
Constraint
22. A cost that could be eliminated in whole or in part if a different course of action is taken that would either end the need for the activity or increase efficiency
Constraint
Avoidable Cost
Relevant cost for decision making
Capital Intensity Ratio
23. The acquisition cost o assets - also known as acquisition or original cost.
Avoidable Cost
Historic Cost
Sunk Cost
Split-Off Point
24. A cost that is expected to differ among alternative future courses of action - also known as differential and relevant cost
Common Cost
Joint Product Costs
Relevant Range
Incremental Cost
25. Define the problem - determine possible alternatives - prepare estimates - identify possible constraints - select the best alternative.
Opportunity Cost
Steps to use in the decision-making process
Outsourcing
Sunk Cost