Managerial Accounting Chapter 5 & 6

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

Explanation

The correct answer is: TRUE
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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About This Quiz
Managerial Accounting Chapter 5 & 6 - Quiz

This quiz assesses key concepts in Managerial Accounting from Chapters 5 & 6, focusing on variances, labor rate calculations, and material price standards. It tests understanding of controllable... see moreoverhead variance, labor efficiency, and material price variance, crucial for effective financial management and decision-making. see less

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

Explanation

The correct answer is: TRUE
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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3. Qualitative considerations are as important as cash flow in investment decisions. Select one:

Explanation

The correct answer is: TRUE

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4. 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:

Explanation

The correct answer is: TRUE

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

Explanation

The correct answer is: TRUE

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6. Variables common to all investments are: Select one:

Explanation

The correct answer is: All of the above

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7. 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).

Explanation

The correct answer is: Unable to determine from data given

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

Explanation

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

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9. 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:

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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10. 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:

Explanation

The correct answer is: Unable to tell from data given

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

Explanation

The correct answer is: FALSE

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

Explanation

The correct answer is: TRUE

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

Explanation

The correct answer is: FALSE
Capital budgeting involves identifying the cash in flows and cash out flows rather than accounting revenues and expenses flowing from the investment. For example, non-expense items like debt principal payments are included in capital budgeting because they are cash flow transactions

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14. 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).

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

Explanation

The correct answer is: The overhead volume variance

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16. 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:

Explanation

The correct answer is: $600 unfavorable

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17. Activity-based costing gives more information with respect to Select one:

Explanation

The correct answer is: Overhead
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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18. 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

Explanation

The correct answer is: 0
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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19. Standards may be viewed by labor as too loose. Select one:

Explanation

The correct answer is: FALSE

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

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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The labor rate variance calculation involves actual direct labor hours...
To calculate the controllable overhead variance actual overhead costs...
Qualitative considerations are as important as cash flow in investment...
Acquisition costs include the cash payments that are required for...
Price lists are acceptable source documents in developing materials...
Variables common to all investments are: Select one:
John Guy is saving for a new boat. He needs $60,000. How much money...
Capital gains are tax consequences of the sale of an old asset if ...
If the actual overhead is $152,000 and the flexible budget overhead...
The standard for direct labor for product C is three hours at $25 per...
If an investment's net present value is zero, then it's IRR must...
Since a firm must outlay cash to acquire assets, their return should...
Unless an addition to working capital is permanent, it should not be...
Jeff Carter is saving for a new speedboat. The cost is $110,000. How...
The overhead variance between the actual production and the...
The standard for direct materials for product A is 6 ft.² at $10...
Activity-based costing gives more information with respect to ...
The standard for direct materials for product A is 6 ft.² at $10...
Standards may be viewed by labor as too loose. Select one:
If the hurdle rate used to discount a stream of cash flows is raised,...
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