Managerial Accounting Chapter 5 & 6

20 Questions | Total Attempts: 43

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Managerial Accounting Chapter 5 & 6

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Questions and Answers
  • 1. 
    If the actual overhead is $152,000 and the flexible budget overhead for actual production is $151,000, the controllable overhead variance is Select one:
    • A. 

      A. $1000 favorable

    • B. 

      B. $1000 unfavorable

    • C. 

      C. 0

    • D. 

      D. None of the above

  • 2. 
    The labor rate variance calculation involves actual direct labor hours used in production. Select one:
    • A. 

      True

    • B. 

      False

  • 3. 
    Price lists are acceptable source documents in developing materials price standards. Select one:
    • A. 

      True

    • B. 

      False

  • 4. 
    The standard for direct labor for product C is three hours at $25 per hour. If the direct labor efficiency variance is $1500 unfavorable, how many units were produced? Select one:
    • A. 

      A. 200

    • B. 

      B. 300

    • C. 

      C. 400

    • D. 

      D. Unable to tell from data given

  • 5. 
    Standards may be viewed by labor as too loose. Select one:
    • A. 

      True

    • B. 

      False

  • 6. 
    The standard for direct materials for product A is 6 ft.² at $10 per square foot. If a firm produces 100 units of product A and uses 600 ft.² at $11 per square foot, the materials price variance is Select one:
    • A. 

      A. $660 unfavorable

    • B. 

      B. $660 favorable

    • C. 

      C. $600 unfavorable

    • D. 

      D. $600 favorable

  • 7. 
    To calculate the controllable overhead variance actual overhead costs are needed. Select one:
    • A. 

      True

    • B. 

      False

  • 8. 
    Activity-based costing gives more information with respect to Select one:
    • A. 

      A. Direct materials

    • B. 

      B. Direct labor

    • C. 

      C. Overhead

    • D. 

      D. None of the above

  • 9. 
    The standard for direct materials for product A is 6 ft.² at $10 per square foot. If a firm produces 100 units of product A and uses 600 ft.² at $11 per square foot, the materials quantity variance is
    • A. 

      A. $660 unfavorable

    • B. 

      B. $660 favorable

    • C. 

      C. 0

    • D. 

      D. None of the above

  • 10. 
    The overhead variance between the actual production and the anticipated production is Select one:
    • A. 

      A. The overhead volume variance

    • B. 

      B. The controllable overhead variance

    • C. 

      C. The flexible budget variance

    • D. 

      D. None of the above

  • 11. 
    Acquisition costs include the cash payments that are required for ownership and any subsequent expenditures required to extend the life of the asset such as a major overhaul. Select one:
    • A. 

      A. TRUE

    • B. 

      B. FALSE

  • 12. 
    Qualitative considerations are as important as cash flow in investment decisions. Select one:
    • A. 

      True

    • B. 

      False

  • 13. 
    Variables common to all investments are: Select one:
    • A. 

      A. Size

    • B. 

      B. Duration

    • C. 

      C. Return

    • D. 

      D. Timing of the return

    • E. 

      E. All of the above

  • 14. 
    John Guy is saving for a new boat. He needs $60,000. How much money should he put in a savings account that compounds at 8% to have $60,000? (Round to the nearest dollar).
    • A. 

      A. $36,410

    • B. 

      B. Unable to determine from data given

    • C. 

      C. $38,706

    • D. 

      D. $39,420.

  • 15. 
    If an investment’s net present value is zero, then it's IRR must also be zero. Select one:
    • A. 

      True

    • B. 

      False

  • 16. 
    Jeff Carter is saving for a new speedboat. The cost is $110,000. How much money must he put in a savings account that compounds at 4% annually to have $110,000 in 7 years? (Round to the nearest dollar).
    • A. 

      A. $80,206

    • B. 

      B. $83,589

    • C. 

      C. $80,606

    • D. 

      D. 84,218

  • 17. 
    Capital gains are tax consequences of the sale of an old asset if Select one:
    • A. 

      A. The asset is sold for any amount other than the book value

    • B. 

      B. the asset is sold for less than the book value

    • C. 

      C. The asset is sold for more than the book value

    • D. 

      D. The future depreciation is not lost

    • E. 

      E. The future depreciation is lost

  • 18. 
    If the hurdle rate used to discount a stream of cash flows is raised, the IRR of the cash stream will Select one:
    • A. 

      A. Always increase

    • B. 

      B. Always decrease

    • C. 

      C. Not change

    • D. 

      D. Increase if the NPV is negative or decrease if the NPV is positive

  • 19. 
    Since a firm must outlay cash to acquire assets, their return should be evaluated with the same terms (cash). Select one:
    • A. 

      True

    • B. 

      False

  • 20. 
    Unless an addition to working capital is permanent, it should not be considered among the cash flows of a capital budget. Select one:
    • A. 

      True

    • B. 

      False

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