CPIM Module 1 F
A design engineering group has dismantled a new product from another supplier. This is
an example of:
disintermediation.
competitive analysis.
thievery.
unethical behavior. - answer competitive analysis.
What is a primary shortcoming of using the simple payback period method to justify
capital budgeting expenditures?
It does not recognize the time value of money.
It is too simple to compute and therefore is subject to adulteration.
It does recognize the time value of money and is therefore more exact and realistic than
using the accounting rate of return (ARR).
It will likely not remain stable over the time period used. - answerIt does not recognize
the time value of money.
In manufacturing, what is the cash conversion cycle?
Length of time for a new product to generate profits
Ratio of accounts receivable for shipped end items to accounts payable for raw
materials
Length of time from purchase of raw materials to collection of accounts receivable
Average time open to close for accounts receivable - answerLength of time from
purchase of raw materials to collection of accounts receivable
In a company with a 12% internal rate of return, a capital budget item costs $18,000 and
has annual savings of $2,500 in labor and $500 in annual power use. What would be
the simple payback period in years?
5 years
6 years
8.3 years
No enough information is provided to calculate the payback period. - answer6 years
A company's income statement is a summary of its:
cash flow for the period.
cash flow and revenues.
revenues and expenses.
financial earnings for the period. - answerrevenues and expenses.
What is the rule for using net present value for project justification?
If the net present value is positive, accept the project. Otherwise, reject it.
If the net present value is negative, accept the project. Otherwise, reject it.
A design engineering group has dismantled a new product from another supplier. This is
an example of:
disintermediation.
competitive analysis.
thievery.
unethical behavior. - answer competitive analysis.
What is a primary shortcoming of using the simple payback period method to justify
capital budgeting expenditures?
It does not recognize the time value of money.
It is too simple to compute and therefore is subject to adulteration.
It does recognize the time value of money and is therefore more exact and realistic than
using the accounting rate of return (ARR).
It will likely not remain stable over the time period used. - answerIt does not recognize
the time value of money.
In manufacturing, what is the cash conversion cycle?
Length of time for a new product to generate profits
Ratio of accounts receivable for shipped end items to accounts payable for raw
materials
Length of time from purchase of raw materials to collection of accounts receivable
Average time open to close for accounts receivable - answerLength of time from
purchase of raw materials to collection of accounts receivable
In a company with a 12% internal rate of return, a capital budget item costs $18,000 and
has annual savings of $2,500 in labor and $500 in annual power use. What would be
the simple payback period in years?
5 years
6 years
8.3 years
No enough information is provided to calculate the payback period. - answer6 years
A company's income statement is a summary of its:
cash flow for the period.
cash flow and revenues.
revenues and expenses.
financial earnings for the period. - answerrevenues and expenses.
What is the rule for using net present value for project justification?
If the net present value is positive, accept the project. Otherwise, reject it.
If the net present value is negative, accept the project. Otherwise, reject it.
