A company has a cost of capital of 12% and a maximum of $20 million to invest. It has identified three possible investment projects, none of which is divisible, as follows.

Which project(s) should the company invest in?

In accordance with a just-in-time (JIT) philosophy, which of the following is regarded as a value added activity?

A company has recently developed a new lawnmower with an estimated market life of 5 years. Production and sale of the lawnmower will require investment in new production equipment costing $750,000. It is expected that this equipment could be sold back to the original vendor for $50,000 at the end of five years.

Purchase of the equipment would be financed by a 5 year fixed rate bank loan at an interest rate of 6%.

A manager already employed by the company would be moved from their current position to manage production of the new lawnmower. Their original position would be filled by a new recruit on a fixed annual salary of $35,000.

Which of the following statements is NOT correct?

Division A and Division B are divisions of the same group. Division A transfers all of its output to Division B.

Which THREE of these alternative transfer pricing bases will prevent any cost inefficiencies in Division A being passed on to Division B?

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 company has three divisions, each of which is an investment centre. The divisional managers ' performance is assessed using return on investment (ROI). A higher ROI will result in a higher bonus for the divisional manager.

The company ' s cost of capital is 15%.

For the forthcoming year each divisional manager has one investment opportunity available as follows:

The manager(s) of which division(s) will proceed with their respective investment opportunity?

A manager must decide which one of three projects should be implemented. For each project the possible outcomes and their associated probabilities can be estimated reliably. The manager has decided to make the decision based solely on which project has the highest expected value of profit.

Which of the following statements are correct?

Select ALL that apply.

A not-for-profit organization measures performance using the three Es. If the organization has made optimum utilization of available resources then it should be described as:

A division of company XYZ has reported an operating profit of $350,000 and its residual income (RI) has been calculated as $60,000. The company ' s cost of capital is 12%.

The division ' s return on investment (ROI) is:

For a pharmaceutical manufacturer, in which perspective of the Balanced Scorecard should the performance measure ' number of patents granted during the year ' be included?