DRAG DROP
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.
Select and Place:
DRAG DROP
Place the correct category of Value Chain activity against each of the activities described below.
Select and Place:
Which of the following statements about modified internal rate of return (MIRR) and internal rate of return (IRR) is correct?
A. MIRR uses a more realistic reinvestment assumption than IRR.
B. MIRR favours projects with long payback periods whereas IRR does not.
C. MIRR and IRR will always rank competing projects in the same order.
D. A project's MIRR will always be higher than its IRR.
A long established organization has recognised the need to make urgent changes to the way it operates in order to remain competitive. The organization wishes to dramatically improve its performance through a fundamental rethinking and radical redesign of its existing activities. Which of the following techniques should be used to achieve this?
A. Functional analysis
B. Kaizen costing
C. Business process re-engineering
D. Process innovation
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:
A. $63200
Kaizen costing is being used by an organization to gradually reduce the unit cost of one of its products in order to achieve a 20% mark up on the product's cost. The selling price of the product must be $72 per unit and this selling price has
been maintained for two years.
Two years ago the product's cost was $3 per unit more than its selling price. Kaizen costing has achieved an 8% reduction from the previous period's unit cost in each of the past two years. The organization expects to continue to achieve the
same rate of cost reduction next year. Which of the following statements provides an accurate analysis of the extent to which Kaizen costing has been successful in achieving the required unit cost for the product?
A. Kaizen costing has successfully achieved the necessary cost reduction.
B. The current cost is $63.00 per unit and the required unit cost will be achieved next year.
C. Kaizen costing has not yet achieved the required unit cost of $57.60 because a greater rate of reduction in costs was needed.
D. The current cost is $63.48 per unit and the required unit cost will be achieved next year.
A manufacturing company is in the process of introducing just in time (JIT) and total quality management (TQM) into every aspect of its value chain. Which TWO of the following are appropriate changes to make to the support activities in the organization's value chain?
A. Inbound logistics would need to ensure that materials of appropriate quality are delivered on a just in time basis.
B. Operations would need to be carried out on a right first time basis as any failure could delay production.
C. After sales service would need to ensure that appraisal costs are kept to a minimum.
D. Procurement would need to arrange to purchase goods so that they are delivered as required.
E. Firm infrastructure would need to arrange appropriate training courses for staff.
F. Technology development would need to ensure that processes are continually improving.
A new product is being manufactured for the first time. The first unit required 600 minutes of labor to manufacture. It is expected that there will be a 90% learning curve for the first 20 units. The learning index for a 90% learning curve is
0.152. Calculate the expected labor time to manufacture the 10th unit. Your answer should be given to the nearest whole minute.
A. 360 minutes, 361 minutes, 362 minutes
Which TWO of the following expressions are correct?
A. 1 + money rate = (1 + real rate) x (1 + inflation rate)
B. 1 + real rate = (1 + money rate) / (1 + inflation rate)
C. 1 + real rate = (1 + inflation rate) / (1 + money rate)
D. 1 + money rate = (1 + inflation rate) / (1 + real rate)
E. 1 + inflation rate = (1 + money rate) x (1 + real rate)
During a Board meeting at a manufacturing company, concerns regarding the analysing of the current inventory management systems and processes are brought up. Attendees of the meeting have made several claims and suggestions but
the managing director admits that he does not know who to believe and so has asked you to let him know which statements of the following statements are TRUE?
Select ALL that apply.
A. Standard Costing is ideal for organisations running a JIT inventory system
B. A JIT system is likely to result in economies of scale
C. ABC is ideal for organisations running a JIT inventory system
D. Standard costing is ideal for organisations in a TQM environment
E. A JIT inventory system reduces inventory costs
