ACCG301 Organisational Planning and Control

SAMPLE TEST
Class Test (v1) – 10 %

Name: SID: Total Marks

/15
Tutor: Tutorial No./Day & Time Total marks converted to
10%:

This test consists of 15 multiple choice questions

Answer all questions
Each question is worth 1mark
Please circle the best answer for each question

1. Business ethics:

A. involves applying ethical and moral standards to business behaviour.

B. should be applied as a separate set of moral standards from general ethics.
C. deals exclusively with the ethical behaviour of stakeholders and shareholders.
D. can by understood from two perspectives—preventative and prohibitive.

2. Which of the following is a difference between internal and external whistle-blowing?

A. Unlike external whistle-blowing, the history of internal whistle-blowing is more difficult

to track.
B. Unlike internal whistle-blowing, external whistle-blowing receives no media coverage.
C. Unlike external whistle-blowing, internal whistle-blowing harms the company's public
image.
D. Unlike internal whistle-blowing, incidents of external whistle-blowing are not well
documented.

3. Which of the following is the lowest level of moral development in Lawrence Kohlberg's
stages of ethical reasoning?

A. Preconventional
B. Conventional
C. Postconventional
D. Social contract

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4. A(n) _____ strategy identifies the set of businesses, markets, or industries in which the
organization competes and the distribution of resources among those businesses.

A. vertical
B. differentiation
C. low-cost
D. functional
E. corporate

5. In the context of the BCG matrix, a star represents a company:

A. with high growth and a strong competitive position in the market.

B. that requires substantial investments to improve its position in the market.
C. with low growth and a strong competitive position in the market.
D. that generates excess revenues and funds other businesses.
E. that will be divested as soon as possible.

6. Appraisal or inspection costs are costs that :

A. are incurred to prevent quality problems from occurring in the first place.
B. are incurred to identify defective products before products are shipped to the customer.
C. result from defects that are caught before the product is shipped to the customer.
D. occur when a defective product makes its way into the hands of the customer.

7. The cost of scrap and rework is an example of what type of quality cost?

A. Prevention costs
B. Appraisal or inspection costs
C. Internal failure costs
D. External failure costs

8. Emmedics, Inc. is launching a new product that it estimates will sell for $30 per unit. Annual
demand is estimated to be 70,000 units. Emmedics estimates that using its current
manufacturing technology, it can manufacture the units for $23 per unit, but if it purchases
a new machine, the units can be manufactured for $22 per unit. Emmedics has a target
profit of 10% return on sales. Under target costing, what is the target cost for the new
product?

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A. $20
B. $22
C. $23
D. $27

9. Water Industries' quality control report for August contains the following items.

Inspecting raw materials received from vendors 2,000

Testing finished products 3,000

Inspecting finished products 4,000

Designing product to reduce production problems 5,000

Repairing and/or replacing products under

6,000
warranty

Maintaining the equipment used to gather quality

7,000
data

Cost (net) of materials wasted during production 8,000

What would be the total of the prevention costs on the August quality control report for Water
Industries?

A. $5,000.
B. $7,000.
C. $11,000.
D. $14,000.

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10. The Wonderlust Retail Company Ltd experiences relatively constant demand of 24 000
units per year for one of its products. The product, a coffee-making machine, costs the
firm $30. Placing an order costs $200 and annual carrying costs are $2 per unit. The firm
works 225 days per year and desires a safety stock of 300 units. The lead time for an order
is 15 working days. The economic order quantity for Wonderlust is:
(Please round the answer to the nearest one)
A. 1549
B. 2324
C. 2191
D. 2221

11. James Bond Pty Ltd uses 960 tonnes of a particular chemical each year. Monthly usage
fluctuates between 70 tonnes and 90 tonnes. The lead time for each order is six weeks
and the economic order quantity is 160 tonnes. The safety stock for Bond's chemical would
be:

A. 10 tonnes
B. 15 tonnes
C. 30 tonnes
D. 40 tonnes

12. Picard Corp. has revenues of $500,000 resulting in an operating profit of $54,000. Invested
assets total $600,000. Residual income is $18,000. Calculate the new residual income if
sales increase by 10% and the profit margin and invested assets remain the same.

A. $23,400
B. $0
C. $3,240
D. $36,000

13. Picard Corp. has sales revenue of $500,000 resulting in operating income of $54,000.
Average invested assets total $600,000, and the cost of capital is 6%. Calculate the return
on investment if sales increase by 10% and the profit margin and invested assets remain
the same.

A. 9.0%
B. 9.9%
C. 10.8%
D. 6.0%

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14. UMUC Corp. has two divisions, Europe and Asia. Europe produces a widget that Asia
could use in its production. Europe's variable costs are $2 per widget while the full cost is
$3.50. Widgets sell on the open market for $6 each. If Europe has no excess capacity,
what would be the maximum transfer price if Asia currently is purchasing 100,000 units on
the open market?
A. $2.00
B. $2.50
C. $3.50
D. $6.00

15. Chipper Division of Acme Corp. sells 80,000 units of part Z-25 to the outside market. Part
Z-25 sells for $40, has a variable cost of $22, and a fixed cost per unit of $10. Chipper has
a capacity to produce 100,000 units per period. Jones Division currently purchases 10,000
units of part Z-25 from Chipper for $40. Jones has been approached by an outside supplier
willing to supply the parts for $36. If Acme uses a negotiated transfer pricing system, what
is the minimum transfer price that should be charged for this transaction?
A. $40
B. $36
C. $32
D. $22

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Marking guide
1A
2A
3. A
4. E
5. A
6. B
7. C
8. D
9. D
10. C
11. B
12. A
13. B
14. D
15. D