Which of the following statements concerning Cost Management Systems (CMS) is False?
a. Performance rewards for top management consists of both long and short term incentives.
b. A CMS is composed of three primary elements: motivational, informational and reporting.
c. A CMS is not designed to cut costs but rather to get the maximum return from costs that are incurred.
d. One of the goals of the informational elements is the preparation of financial statements.
d
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Ajax predicts that if a customer pays on the first sale, it is assured that it is a reliable customer. As such, it expects that customer to generate a net profit of $350 per year for 12 years. Ajax calculates present value with a 15% rate of return. There is a 90% probability that Ajax will secure a reliable customer. However, if the customer defaults, Ajax will have to incur a loss of $500. Determine the expected benefit if credit is granted.
A) $1,857 B) $1,757 C) $1,657 D) $1,957
Janice purchased a living room set for $1,000 and insured this furniture on an actual cash value basis
Two years later the living room set was destroyed by a covered peril. At the time of loss, the property had depreciated in value by 25 percent. The replacement cost of the furniture at the time of loss was $1,200. Assuming no deductible, how much will Janice receive from her insurer? A) $900 B) $950 C) $1,000 D) $1,200