Last Attempt P2 Questions

Advanced Management Accounting Questions and Answers

Question 13

SQ has the opportunity to invest in project X. The net present value for project X is $12,600. Cash inflows occur in years 1, 2 and 3. The company's cost of capital is 14%.

Calculate the annualized equivalent annuity of project X.

Give your answer to the nearest whole $.

Options:

Question 14

In order to remain competitive an organization wishes to achieve cost savings for one of its existing products.

Which of the following correctly describes methods which the organization can use to achieve these cost savings?

Select ALL that apply.

Options:

Functional analysis is carried out only on existing products and is concerned only with minimizing the cost of the originally defined functions of a product.

Value engineering is a fundamental rethinking and radical redesign of an organization's existing processes.

Target costing is continuously setting new stretch targets while the product is in production.

Value analysis is examining a product's costs in order to achieve its purpose at a reduced cost while maintaining its reliability and quality.

Kaizen costing is seeking to make cost savings by continuously making small incremental cost reductions while the product is in production.

Question 15

Which TWO of the following expressions are correct?

Options:

1 + money rate = (1 + real rate) x (1 + inflation rate)

1 + real rate = (1 + money rate) / (1 + inflation rate)

1 + real rate = (1 + inflation rate) / (1 + money rate)

1 + money rate = (1 + inflation rate) / (1 + real rate)

1 + inflation rate = (1 + money rate) x (1 + real rate)

Question 16

LL produces an item, the Z, for which the demand curve is estimated to be:

P = 10 - 0.0001Q

where, P is the unit price in $ and Q is the annual sales volume in units;

Marginal revenue (MR) = 10 - 0.0002Q

The variable cost of producing the Z is $2 per unit. The annual fixed costs of production are $110,000.

What is the profit maximizing output level?

Options:

50,000 units

45,000 units

40,000 units

35,000 units

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Advanced Management Accounting Questions and Answers

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