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NEW QUESTION 57
Discuss Whitney's arguments for allocating more capital funds to the Airline Catering division.
Essay
Food Depot Ltd (FDD is a privately-held company that provides catering services to airlines and operates several restaurant chains including fast food, casual dining, and fine dining restaurants FDL has been profitable m recent years and has a very strong cash position FDL's newest division. Food-To-Go. is an online meal ordering and delivery platform acquired by FDL two years ago.
In 20X7. sales for the entire company were SI billion, with 50% of the business coming from the Airline Catering division. FDL is the country's leading airline catering services provider and controls 60% of the market share. However, the outlook of the airline catering industry is gloomy. The compound annual growth rate of the industry for the past five years was only 0.5% as airline networks have increasingly dropped catering on short domestic flights.
The Food-To-Go division only contributed 5% of FDL's total sales in 20X7 and is far behind in competing for market share of the online meal ordering and deliver, industry. It is estimated that Food-To-Go's sales were only 20% of the industry leader's sales However, the outlook for the online meal ordering and delivery services industry is bright. The compound annual growth rate of the industry since it started three years ago was 50%. It is estimated the rapid growth of the industry will continue in the foreseeable future.
The costs of shared corporate services are allocated based on each division s revenue FDL usually caps its capital expenditure budget to 4% of budgeted sales revenue In a recent capital budget coordination meeting.
Smith Whitney, the head of the Airline Catering division. complained that his division is underfunded on capital projects . The budgeted capital expenditure had been much less than 4 % of the division's budgeted sales in the past three years He argued that his division is the company's best-performing division, and it needs more funds to maintain its market share m the industry Whitney wants to reduce the capital expenditure budget for Food-To-Go and reallocate those funds to his division.
Susan Wiley, the bead of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company Wiley argues that her division had the highest ROI in 20X7. and it deserves more capital funding FDL's required rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follows (in $ millions).
Answer:
Explanation:
See the Answer below in Explanation details.
Explanation
Unless Whitney can't justify that the returns on the funds allocated to the division will create more returns as compared to if it's diverted to the food to go division, allocating the funds to the Whitney's division will not be justifiable and efficient use of resources of the company though the residual income or return on investment will be higher however, future prospects are full which needs to be factored.
NEW QUESTION 58
The manager in charge of the disaster recovery plan for a company has ensured that there is off-site storage of key data programs, operating systems and documentation. Which one of the following is the best next step to be prepared for a disaster?
- A. She should enter into reciprocal agreements with alternative ''hot'' sites.
- B. She should create a planning document including a list of critical applications.
- C. She should ensure that the "cold" sites are fully equipped and ready.
- D. She should make sure that everyone Knows the location of offsite data storage.
Answer: D
NEW QUESTION 59
Life-cycle costing is most effective when used with products that have a
- A. long development period and many costs incurred poor to manufacturing
- B. short development period and many costs Incurred during manufacturing
- C. short development period and few costs incurred poor to manufacturing
- D. long development period and many costs incurred during manufacturing
Answer: A
NEW QUESTION 60
in preparing Klein Corporation's master budget for the following calendar year, the manager of the Production Department requested the purchase of a new piece of machinery with a purchase price of $150.000 in addition, the cost of installing the machine would total $13.000. The purchase price of the machine would be financed by a 6%. 5-year loan with interest due quarterly. The amount Klein Corporation should include in its Capital Expenditures Budget due to this purchase is
- A. $163,000
- B. $172,000
- C. $13,000
- D. $22,000
Answer: B
NEW QUESTION 61
Playtime inc. manufactures playground equipment and uses 60 board feet of lumber in each model no 643 produced The company, which anticipates selling 350 units of this model during April, plans to boost its finished goods inventory in April by 80 units in preparation for the peak summer season Playtime expects to manufacture 450 units in May Playtime has only 500 board feet of lumber on hand as of April 1 because of a temporary shortage, and typically maintains a lumber Inventory equal to 20% of the following month's production needs. On the basis of this information, how many board feet of lumber should the company plan to purchase in April?
- A. $30,700
- B. $31,900
- C. $31,200
- D. $31,700
Answer: A
NEW QUESTION 62
A company extracts data from existing data sets to identify customer patterns By doing this, the company is applying
- A. descriptive analysis
- B. prescriptive analysis
- C. diagnostic analysis
- D. predictive analysis
Answer: A
NEW QUESTION 63
Lewis Farms inc, is a large grower of vegetables in Northern California. During a year in which there is no drought the firm earns S3 million from its produce In a year with a partial drought, earnings are $1 million and if there is a severe drought, the firm has zero earnings Based on many years of weather data, in 50% of the years there was no drought in 30% of the years there was a partial drought, and a severe drought occurred 20% of the time. Lewis Farms has an opportunity to purchase an insurance policy that would pay Lewis $2 million in the event of a severe drought $1 million in the case of a partial drought, and nothing in the event there is no drought ignoring taxes, the maximum premium that Lewis would be willing to pay for the policy is
- A. $1, 500, 000.
- B. $700,000.
- C. $1, 200, 000.
- D. $500,000.
Answer: D
NEW QUESTION 64
Two examples or measures that could appear in the Learning and Growth section of a balanced scorecard are
- A. number of employee suggestions and finished products per day per employee
- B. employee training hours and product defect rates
- C. employee promotion rate and number of environmental incidents
- D. employee turnover rate and employee training hours
Answer: D
NEW QUESTION 65
A company recently used 500 direct labor hours to manufacture ten units of a new product, if the company employs the cumulative average-time learning model with a 90% learning curve, the number of direct labor hours the company would expect to use to produce the next ten units of this product is
- A. 0
- B. 1
- C. 2
- D. 3
Answer: D
NEW QUESTION 66
identity and explain one benefit and one limitation of outsourcing most of me payroll-related work to an outside payroll service provider.
Essay
Zhiliang Foods Inc. (ZFI) is a privately-held food distributor ZFI has two production departments' the Meat Department is labor-intensive. while the Bakery Department is highly automated ZFI applies a single overhead allocation rate, using the number of pounds produced as an allocation base for the whole company The expected annual overhead costs of ZFI for 100 million pounds produced are as follows (¥ in millions).
ZFI has one payroll administrator in its Human Resources department, but most of the payroll related work is outsourced to a payroll service provider ZFI's payroll administrator is responsible for tracking the list of current employees and maintaining the most up-to-date employee information, including bank accounts for payroll direct deposits.
Each pay period, the payroll administrator emails the information for all current employees' hours worked to the payroll service provider. The service provider then processes the payroll, makes direct deposits to employees' bank accounts, mails payroll stubs to employees' homes and emails payroll reports to ZFI's payroll administrator. The payroll administrator then makes payroll journal entries to ZFI's accounting system based on the payroll reports received ZFI's accountant prepares a bank reconciliation each month to ensure ZFI s payroll payments on ZFI's bank statement match the amounts shown on the payroll reports from the service provider.
ZFl's management is evaluating the purchase of data encryption software and human resources management software next year. The human resource management software is expected to provide various human resources and payroll-related functions.
In addition, the human resource software can generate a report to indicate the monthly employee turnover rate and the average service length of employees who have resigned. The system can also generate a report to indicate the main reasons for resignations and identify current employees who are at risk of resigning. The system will recommend actions to help retain these employees, such as more training opportunities or a pay raise.
Answer:
Explanation:
See the Answer below in Explanation details.
Explanation
One of ihe advantage of the outsourcing is that the company management would have enough time to focus on its key strategic issues rather that payroll processing The downside of the outsourcing is confidentiality issue which might arise as key information about payroll would he shared with the outsource service provider.
NEW QUESTION 67
A company incurred the following selected costs In its manufacturing operations during the month.
- A. $23,000
- B. $20,000
- C. $21,000
- D. $22,000
Answer: D
NEW QUESTION 68
A company announced a stock dividend under which 1.000.000 shares will be issued to the holders of the
10.000.000 shares that are currently outstanding The stock which has a par value of $1 per share, traded at $10 on the dividend declaration date. How will shareholders' equity be affected by this stock dividend?
- A. Common stock will increase by $10.000.000
- B. Paid-in capital will increase by $9,000.000
- C. Retained earnings will decrease by $1.000.000
- D. Retained earnings will decrease by $9.000.000
Answer: B
NEW QUESTION 69
Edward Pane is an external auditor who is seeking an understanding of the cash receipts process at his new client Pane decides to use a flowchart to analyze the operations for efficiency and control. Which one of the following statements is true with respect to the decision to use a flowchart for this purpose?
- A. Pane should not use a flowchart as it is used primarily after the risks have been identified
- B. Pane properly selected the flowchart as it will help to depict the process and identify any missing or inadequate controls
- C. Pane property selected the flowchart as a tool to match each of the risks to the corresponding primary control
- D. Pane should not have selected a flowchart as it is better suited to help with compliance testing of existing controls
Answer: B
NEW QUESTION 70
The best way to illustrate the entire distribution of numerical data for a single variable is with a
- A. histogram
- B. heat map
- C. pie chart
- D. bubble chart
Answer: D
NEW QUESTION 71
A heating. ventilation, and air conditioning (HVAC) company estimates that n takes a new team of technicians
100 labor hours to install its first HVAC system and that there is an 80% learning rate What are the estimated total labor hours for a new team to complete its first four installations?
- A. 320.
- B. 295.
- C. 256.
- D. 340.
Answer: C
NEW QUESTION 72
Faxton and Rexford are competitor in the same industry Faxton utilizes an incentive program mat focuses solely on net income Rexford uses customer service and employee development in addition to net income in its incentive program. Over time. Faxton can be expected to
- A. be less likely to misstate earnings due to the importance of earnings to management
- B. have higher sales growth than Rexford due to management s strong focus
- C. consistently be more profitable than Rexford due to not funding training programs
- D. be more profitable than Rexford initially Put lose this advantage
Answer: A
NEW QUESTION 73
After a recent earthquake in a nearby city the board of directors of a company has requested a review of the company s disaster recovery plan Which of the following would be classified as a weakness in the company's disaster recovery plan?
- A. Members of the company's disaster recovery team maintain current copies of the disaster recovery plan m their homes.
- B. Management has decided not to maintain a hot site because it was determined that the costs outweigh the benefits.
- C. A cold site with backup data and documents is maintained on the basement level of the company s headquarters.
- D. The details of the disaster recovery plan stipulate that internal audit should review the plan every other year rather than annually.
Answer: C
NEW QUESTION 74
Personal Solutions manufactures nand-new personal computers and communications devices The company uses a Job-order costing system and applies manufacturing overhead to products on the oasis of machine hours The following estimates were used in preparing the predetermined overhead rate at the beginning of the year.
During the year, weak sales led to a reduction in production and a buildup or inventory Production records provided the following information.
Finished goods inventory included applied overhead of $100.000 while cost of goods sold included applied overhead of $300,000. There was no work-in-process inventory at year end how should the under-applied manufacturing overhead be handled at year end?
- A. All of the under-applied manufacturing overhead should be earned over until the subsequent year and used to adjust the estimated predetermined rate for that year
- B. All of the under-applied manufacturing overhead should be charged to Cost of Goods Sold for the year.
- C. $12.500 of the under-applied manufacturing overhead should be charged to finished goods inventory and S37 500 should be charged to Cost of Goods Sold
- D. $12.500 of the under-applied manufacturing overhead should be charged to finished goods inventory and S37.500 should be treated as a period cost
Answer: C
NEW QUESTION 75
in order for the IT manager in cnarge of a company's disaster recovery plan to have complete planning documentation, he should ensure that the documentation includes all of the following except
- A. the phone numbers of key employees
- B. program and operating system documentation
- C. the results of the latest disaster recovery test run
- D. vendors who win set up the hot site
Answer: D
NEW QUESTION 76
Which of the following represents a significant deficiency m the design of controls?
- A. Evidence of misrepresentation by accounting personnel
- B. Management overrides of the accounting for transactions
- C. Failure to follow up and correct previously identified internal control deficiencies
- D. Inadequate controls over access to computer systems, data and files
Answer: D
NEW QUESTION 77
Trans Action inc. (TAI) is a multidivisional supplier of power train components to the automobile industry.
Following is selected information for the year just ended for each of the three divisions. Gear Axle and Housing.
The tai Board of Directors has decided to reward the employees or the divisions by allowing them to share in a bonus pool equal to S100.000 for each percentage point the return on investment (ROI) earned by their division exceeded the ROI of comparable firms as shown in the table below.
Rank the amounts in the bonus pools for the respective divisions from highest to lowest.
- A. Gear. Housing, Axle
- B. Housing, Axle, Gear.
- C. Axle, Housing, Gear
- D. Axle, Gear, Housing
Answer: B
NEW QUESTION 78
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