A cost-benefit analysis would show that the manufacturing company would save

• A.US $54,000 by purchasing the motors from the outside vendor
• B.US $69,000 by purchasing the motors from the outside vendor
• C.US $81,000 by making the motors internally
• D.US $96,000 by making the motors internally

Correct Answer: C

The relevant costs of making the motor are direct materials, direct labor, variable manufacturing overhead, rental costs of the special machinery, and rental costs of the new warehouse. The fixed manufacturing overhead and the costs of the current warehouse space are not relevant because they will be incurred regardless of whether the motor is made or bought. Buying the motor will cost US $630,000 30,000 x $21).
Making the motor will cost US $549,000 {[30,000 x $8 DM +$ 4 DL + $3 VOH)] +$54,000 + $45,000}. Hence, making the motor saves US $81,000 $630,000 - $549,000). A manufacturing company is considering a new product for the coming year, which is an electric motor the company can purchase from a reliable vendor for US $21.00 per unit. The alternative is t. manufacture the motor internally. The company has excess capacity to manufacture the 30,000 motors needed in the coming year except for manufacturing space and special machinery. The machinery can be leased for US $45,000 annually. Finished goods warehouse space adjoining the main manufacturing facility, leased for US $39,000 annually, can be converted and used to manufacture the motors. Additional offsite space can be leased at an annual cost of US $54,000 to replace the finished goods warehouse. The estimated unit costs for manufacturing the motors internally, exclusive the leasing costs itemized above, are:

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According to 11A guidance on IT, which of the following spreadsheets is most likely to be considered a high-risk user-developed application?

• A.A revenue calculation spreadsheet supported with price and volume reports from the production department.
• B.An asset retirement calculation spreadsheet comprised of multiple formulas and assumptions.
• C.An accounts receivable reconciliation spreadsheet used by the accounting manager to verify balances
• D.An ad-hoc inventory listing spreadsheet comprising details of written-off inventory quantities.

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Which type of bond sells at a discount from face value, then increases in value annually until it reaches maturity and provides the owner with the total payoff?

• A.Commodity-backed bonds.
• B.Zero coupon bonds.
• C.Junk bonds.
• D.High-yield bonds.

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Which of the following application controls, implemented by management, monitors data being processed to ensure the data remains consistent and accurate?

• A.Integrity controls
• B.input controls
• C.Output controls.
• D.Management trail controls

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Omen Company is a manufacturer of men's shirts. It distributes weekly sales reports to each sales manager. The quantity 2R5 appeared in the quantity sold column for one of the items on the weekly sales report for one of the sales managers. The most likely explanation for what has occurred is that the:

• A.Output quantity has been stated in hexadecimal numbers.
• B.Computer has malfunctioned during execution.
• C.Printer has malfunctioned and the "R" should have been a decimal point.
• D.Program did not contain a data checking routine for input data.

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