15. Among the following major parts of a project feasibility study, which grouping is considered critical?

a. Management, financial and social returns

b. Technical. Financial and environmental aspects
c. Economic benefits, management, financial
d. Marketing, engineering or technical and financial
16. Which of the following defines variable cost behavior?

Total cost reaction Cost per unit reaction

to increase in activity to increase in activity

a. remains constant remains constant

b. remains constant increases
c. increases increases
d. increases remains constant

17. Both Company Y and Company Z produce similar products that need negligible distribution costs. Their assets
operation and accounting are very similar in all respects except that Company Y uses direct costing and Company Z
uses absorption costing.
A. Co. Y would report a higher inventory value than Co. Z for the years in which production exceeds
sales
B. Co. Y would report a higher inventory value than Co. Z for the years in which production exceeds the normal
or practical capacity
C. Co. Z would report a higher inventory value than Co. Y for the years in which production exceeds sales
D. Co. Z would report a higher net income than Co. Y for the years in which production equals sales

18. Recording cash dividend payment when declaration was recorded earlier would
a. Increase both current ratio and working capital
b. Decreases both current ratio and working capital
c. Have no effect on current ratio or earnings per share
d. Increase current ratio but no effect on working capital.
19. Which of the following is not a true statement?
A. Many costs are controllable at some level with a company.
B. Responsibility accounting applies to both profit and not-for-profit entities.
C. Fewer costs are controllable as one moves up to each higher level of managerial responsibility.
D. The term segment is sometimes used to identify areas of responsibility in decentralized operations.

20 Regression shows
A. the proportion of the variation of dependent variable explained by dependent variables.
B. the proportion of the variation of independent variable explained by the independent variables.
C. the proportion of the variation of dependent variable explained by the independent variables.
D. none of the above

21 A management’s preference for a very low degree of operating leverage might indicate that:
A. an increase in sales volume is expected.
B. a decrease in sales volume is expected.
C. the firm is very unprofitable.
 D.the firm has very high fixed costs.

22 Which costs will change with an increase in activity within the relevant range?
A. Total fixed costs and total variable cost.
B. Per unit fixed costs and total variable cost.
C. Per unit variable cost and per unit fixed cost.
D.Per unit fixed cost and total fixed cost.

23 The increased use of automation and less use of the work force in companies has caused a trend towards an
increase in
A. both variable and fixed costs.
B. fixed costs and a decrease in variable costs.
C. variable costs and a decrease in fixed costs.
D.variable costs and no change in fixed costs.
24. The distinction between direct and indirect costs depends on whether a cost

a. is controllable or non-controllable.
b. is variable or fixed.
c. can be conveniently and physically traced to a cost object under consideration.
d. will increase with changes in levels of activity.

25. In a project feasibility study, the following are true except one.
a. The characteristics of a good feasibility study are comprehensiveness, objectivity and it is simple.
b. One of the parties interested in feasibility studies is the stockholder
c. It is based on available information and opinions of the party involved in the preparation of the study
d. Since the data gathering is a basic step in its preparation, all essential and required information should always be
readily available.

26. Ferris Corp. wants to increase its current ratio from the present level of 1.5 when it closes the books next week.
The action of __________ will have the desired effect.
A. payment of current payables from cash
B. sales of current marketable securities for cash
C. write down of impaired assets
D. delay of next payroll

27. A firm has a lower asset turnover ratio than the industry average, which implies
A. the firm has a lower P/E ratio than other firms in the industry.
B. the firm is less likely to avoid insolvency in the short run than other firms in the industry.
C. the firm is less profitable than other firms in the industry.
D. the firm is utilizing assets less efficiently than other firms in the industry.