Question 21
The performance of an investment centre manager is assessed by return on investment (ROI) alone. At present, his expected ROI for next year is 15%. The manager must now decide whether to invest in a new project that is expected to yield an ROI of 14%. The cost of capital is 12%.
Indicate whether each of the following statements is true or false.
Question 22
A goal congruent transfer price will always:
Question 23
A company is investing $200,000 in a project which will generate a cash flow of $60,000 each year for five years starting immediately. The company's cost of capital is 7%.
The net present value of the investment to the nearest $100 is $
Question 24
The following cost of quality report has been prepared for the latest period.
What is the difference between the cost of conformance and the cost of non-conformance?
Question 25
A company is determining the selling price for its new product.
At a selling price of $16 per unit there will be zero demand but for every $1 reduction in the price, demand will increase by 100 units per period.
Production must be in batches of 100 units. The variable cost per unit will be $8 if 400 units are produced in a period. For each additional batch produced in a period the variable cost per unit will increase by $1 per unit for the additional batch only.
No inventories will be held.
Which of the following sales and production volumes will generate the highest contribution per period?