# Managerial Accounting Chapter 5 & 6

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Quizzes Created: 2 | Total Attempts: 552
Questions: 20 | Attempts: 315

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• 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

B. B. \$1000 unfavorable
Explanation
The correct answer is: \$1000 unfavorable
Managers use a flexible budget to isolate overhead variances and to set the standard overhead rate. Flexible budgets show the budgeted amount of manufacturing overhead for various levels of output.

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• 2.

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

• A.

True

• B.

False

A. True
Explanation
The labor rate variance is found by computing the difference between actual hours multiplied by the actual rate and the actual hours multiplied by the standard rate

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• 3.

### Price lists are acceptable source documents in developing materials price standards. Select one:

• A.

True

• B.

False

A. True
Explanation

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• 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

D. D. Unable to tell from data given
Explanation
The correct answer is: Unable to tell from data given

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• 5.

### Standards may be viewed by labor as too loose. Select one:

• A.

True

• B.

False

B. False
Explanation

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• 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

C. C. \$600 unfavorable
Explanation
The correct answer is: \$600 unfavorable

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• 7.

### To calculate the controllable overhead variance actual overhead costs are needed. Select one:

• A.

True

• B.

False

A. True
Explanation
Factory overhead controllable variance is the difference between actual expenses incurred and the budget allowance based on standard hours allowed for work performed.

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• 8.

• A.

A. Direct materials

• B.

B. Direct labor

• C.

• D.

D. None of the above

Explanation
Activity-based costing (ABC) is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. This model assigns more indirect costs (overhead) into direct costs compared to conventional costing

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• 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

C. C. 0
Explanation
A material quantity variance is the difference between the actual amount of materials used in the production process and the amount that was expected to be used. The measurement is employed to determine the efficiency of a production process in converting raw materials into finished goods

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• 10.

### The overhead variance between the actual production and the anticipated production is Select one:

• A.

• B.

• C.

C. The flexible budget variance

• D.

D. None of the above

A. A. The overhead volume variance
Explanation

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• 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

A. A. TRUE
Explanation

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• 12.

### Qualitative considerations are as important as cash flow in investment decisions. Select one:

• A.

True

• B.

False

A. True
Explanation

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• 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

E. E. All of the above
Explanation
The correct answer is: All of the above

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• 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.

B. B. Unable to determine from data given
Explanation
The correct answer is: Unable to determine from data given

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• 15.

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

• A.

True

• B.

False

B. False
Explanation

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• 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

B. B. \$83,589
Explanation
The correct answer is: \$83,589 . A=P(1+r/n)^nt
A = final amount
P = initial principal balance
r = interest rate
n = number of times interest applied per time period
t = number of time periods elapsed

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• 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

C. C. The asset is sold for more than the book value
Explanation
The correct answer is: The asset is sold for more than the book value

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• 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

C. C. Not change
Explanation
The correct answer is: Not change, not change; Internal Rate of Return is calculated from the undiscounted cash flows. The discounted rate chosen has absolutely nobearing on IRR

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• 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

A. True
Explanation

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• 20.

• A.

True

• B.

False

B. False
Explanation