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1. A company extracts data from existing data sets to identify customer patterns By doing this, the company is applying
A) prescriptive analysis
B) predictive analysis
C) diagnostic analysis
D) descriptive analysis
2. Stone Ltd manufactures socket wrenches .The company produced 400 000 wrenches and sold 350,000 this year. The following information pertains to the costs accumulated in Stone's inventory.
What is the difference between Stones operating income under absorption costing and variable costings
A) $28,000 lower using variable costing
B) $19,750 lower using variable costing
C) $16,750 higher using absorption costing.
D) $36.500 higher using absorption costing
3. Discuss Whitney's arguments for allocating more capital funds to the Airline Catering division.
Essay
Food Depot Ltd (FDD is a privately-held company that provides catering services to airlines and operates several restaurant chains including fast food, casual dining, and fine dining restaurants FDL has been profitable m recent years and has a very strong cash position FDL's newest division. Food-To-Go. is an online meal ordering and delivery platform acquired by FDL two years ago.
In 20X7. sales for the entire company were SI billion, with 50% of the business coming from the Airline Catering division. FDL is the country's leading airline catering services provider and controls 60% of the market share. However, the outlook of the airline catering industry is gloomy. The compound annual growth rate of the industry for the past five years was only 0.5% as airline networks have increasingly dropped catering on short domestic flights.
The Food-To-Go division only contributed 5% of FDL's total sales in 20X7 and is far behind in competing for market share of the online meal ordering and deliver, industry. It is estimated that Food-To-Go's sales were only 20% of the industry leader's sales However, the outlook for the online meal ordering and delivery services industry is bright. The compound annual growth rate of the industry since it started three years ago was 50%. It is estimated the rapid growth of the industry will continue in the foreseeable future.
The costs of shared corporate services are allocated based on each division s revenue FDL usually caps its capital expenditure budget to 4% of budgeted sales revenue In a recent capital budget coordination meeting.
Smith Whitney, the head of the Airline Catering division. complained that his division is underfunded on capital projects . The budgeted capital expenditure had been much less than 4 % of the division's budgeted sales in the past three years He argued that his division is the company's best-performing division, and it needs more funds to maintain its market share m the industry Whitney wants to reduce the capital expenditure budget for Food-To-Go and reallocate those funds to his division.
Susan Wiley, the bead of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company Wiley argues that her division had the highest ROI in 20X7. and it deserves more capital funding FDL's required rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follows (in $ millions).
4. Grayson Inc. experienced the following costs per unit this year for one of the direct materials involved in producing its main product
3.1 pounds @ $4 20 per pound = $13.02 per finished unit
For the next year. Grayson expects to produce 7.400 finished units. The price per pound of the direct material is expected to rise 10%. To combat this increase. Grayson has adapted its manufacturing process to reduce the amount of the direct material needed per finished unit by 5% What is the direct materials budget for the next year?
A) $105,983
B) $91,531
C) $100,684
D) $101,165
5. Which one of the following statements describes now Section 302 of the Sarbanes-Oxley Act impacts a company's Internal control environment?
A) Executives are more supportive since they certify their responsibility for the system
B) Greater external scrutiny results because a new auditor must be appointed annually
C) The board s financial expertise improves because a financial expert is appointed
D) The auditor is more independent because non-audit services are prohibited
Solutions:
| Question # 1 Answer: D | Question # 2 Answer: C | Question # 3 Answer: Only visible for members | Question # 4 Answer: C | Question # 5 Answer: A |
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