6) The process of evaluating relevant information that changes operating income under alternative courses of action is called:

A. incremental analysis

B. cost-benefit analysis

C. opportunity cost analysis

D. CVP analysis

7) A cost center responsibility report ________.

A. typically focuses on the flexible budget variance

B. includes depreciation expense

C. is the same as a performance report

D. shows all costs incurred by the department

8) Which of the following situations suggests the acceptance of an investment proposal?

A. The investment will have a residual value.

B. The present value of the net cash inflows exceeds the initial investment.

C. The IRR is lower than the hurdle rate.

D. The cash inflows are less than the initial investment.

9) Carlos Naturals manufactures bulk quantities of cleaning fluids. The company currently sells 600 containers a month at a sales price of $22 per unit. The addition of a new disinfectant will result in a sales price of $25 per unit for the improved product. It would cost a total of $3,800 per month to make the alteration. Operating income would ________.

A. increase by $3,800

B. increase by $2,000

C.decline by $2,000

D. decline by $13,200

10) Which of the following is a capital budgeting method used to screen potential investments?

A. return on assets

B. accounting rate of return

C. debt-to-equity ratio

D. acid test ratio