Please BOLD the correct answer. There should be only 1 correct answer per question.

1. Which of the following factors should be considered in a make or buy decision?
   1. variable cost of manufacturing;
   2. the purchase price of the item that will be bought from an outsider.
   3. the fixed overhead that is traced directly to the item;
   4. all of the above; or
   5. none of the above.

1. Division L of Libby Manufacturing has an ROI of 24% and an asset turnover of 1.6. What is the profit margin?
   1. 6%;
   2. 15%;
   3. 24%;
   4. 38%;or
   5. none of the above.

1. Which of the following budgets is NOT part of the master operating budget?
   1. overhead budget;
   2. production budget;
   3. cash budget;
   4. capital budget; or
   5. all of the above.

1. Goal congruence exists when the goals of:
   1. a profit centre are consistent with those of an investment centre;
   2. unit managers are consistent with organizational goals;
   3. employees who are empowered to maximize sub-optimization are promoted to cost centre manager;
   4. the organization are included in a vision statement; or
   5. none of the above.

1. A quantitative non-financial performance measure for a manufacturing firm would be:
   1. a cost variance;
   2. net cash flow;
   3. number of customer complaints; or
   4. net income per employee.

1. ____ involves pushing the authority to make decisions down to lower levels in the organization.
   1. decentralization
   2. responsibility accounting
   3. sub-optimization
   4. synchronous management

7. Which of the following is an advantage of decentralization?

1. Personnel may not have good decision-making skills.
2. It can be expensive.
3. It helps top management recognize and develop managerial talent.
4. It may require more effective methods of communication among employees.

Part B (5 minutes, 3 marks)

1. Give an example of a fixed cost that is relevant. __________________________________________________________________

1. Give an example of a future cost that is NOT relevant. __________________________________________________________________
2. The NPV of a capital project is the same as the total profit of a project expressed in present dollars. Do you agree? Y N