ACCT final exam practice #2
The ________ capital budgeting method uses accrual accounting, rather than net cash flows, as a basis for calculations. NPV Payback ARR IRR
ARR
Which of the following does activity-based costing consider to be the fundamental cost object? Finished goods Direct materials Direct labor hours Activities
Activities
In which of the following company types would the manager use a direct materials budget? Manufacturing Merchandising Service All of the above
Manufacturing
"The comprehensive budget" is best described by which of the following terms? Responsibility center Master budget Sensitivity analysis Operating budget
Master budget
In pricing a product, managers should consider which of the following Only period costs Only variable costs Only fixed costs None of the above
None of the above
The ________ budget starts with the number of units to be produced. direct materials direct labor manufacturing overhead All of these choices start with the number of units to be produced.
All of these choices start with the number of units to be produced.
Which of the following is most likely not to use process costing? Exxon-Mobile (gasoline) General Mills (cereal) Ashley Custom Furnishings DuPont Chemical
Ashley Custom Furnishings
Which of the following financial performance measures can be used to compare potential projects of different sizes? Sales revenue Residual income Operating income ROI
ROI
Which term below best fits "a part, segment, or subunit of a company whose manager is accountable for specified activities"? Sensitivity analysis Operating budget Responsibility center Master budget
Responsibility center
As managers use less and different types of direct materials, which of the following standards do managers focus on to enhance sustainability in the workplace? Quantity/Efficiency standard Price standard Flexible standard Both A and B
Both A& B
The first three steps to allocating manufacturing overhead are taken before the year begins and include all of the following except allocating some manufacturing overhead to each individual job . selecting an allocation base and estimating the total amount that will be used during the year. calculating the predetermined manufacturing overhead rate. estimating total manufacturing overhead costs for the coming year.
allocating some manufacturing overhead to each individual job.
A company would consider all of the following in computing the IRR of an investment, except the cost of the project. depreciation expense on the assets of the project. predicted cash inflows over the life of the project. present value factors.
depreciation expense on the assets of the project.
The variable overhead rate variance may be caused by variances in the following production inputs except fixed manufacturing overhead. indirect materials. indirect labor. None of the above impacts the variable overhead rate variance.
fixed manufacturing overhead.
The difference between the actual revenues and expenses and the master budget is known as a? capital budget variance. master budget variance. static budget variance. flexible budget variance.
master budget variance.
The ________ capital budgeting methods are based on cash flows, profitability, and the time value of money. net present value and internal rate of return accounting rate of return and internal rate of return payback and accounting rate of return payback and net present value
net present value and internal rate of return
If a company decides to outsource and then has freed capacity, the decision on what to do with that freed capacity would be based upon opportunity costs. avoidable fixed costs. unavoidable fixed costs. none of the above.
opportunity costs.
All of the following are cash outflows from an operating activity except payment for purchasing inventory. payment of interest on a loan. payment to the government for tax bill. owner withdrawal from the company.
owner withdrawal from the company.
A(n) ________ is an estimated manufacturing overhead rate computed at the beginning of the year. cost allocation predetermined manufacturing overhead rate cost driver actual manufacturing overhead rate
predetermined manufacturing overhead rate
Karpets Industries is investing in a new high-speed loom for weaving its rugs and carpets. The new loom will have a useful life of 7 years and cost $60,000. The loom's residual value is $4000. Assume that Karpets requires a return of 10% and that the loom will create annual cost savings of $16,050. What is the net present value (NPV) of the new loom?
$20,183
Which of the following items is a component of a cash payments budget? Gains on sales of equipment Cash dividends Depreciation expense Bad debt expense
Cash dividends
When management uses feedback to take corrective action on the budgets, which of the following management responsibilities are being fulfilled? Planning Adjusting Directing Controlling
Controlling
Which of the following statements may be true if actual units produced exceed the budgeted units to be produced? Overhead flexible budget variance is expected to be favorable. Fixed overhead volume variance is expected to be favorable. Production volume variance is expected to be unfavorable. Overhead flexible budget variance is expected to be unfavorable.
Fixed overhead volume variance is expected to be favorable.
The present value of an investment is affected by all of the following except? The type of investment (annuity versus lump sum) The number of time periods (length of the investment) The interest rate The value of a past investment
The value of a past investment
How do variable costs per unit behave? They decrease as production decreases. They decrease as production increases. They remain the same throughout production levels within the relevant range. They increase as production decreases.
They remain the same throughout production levels within the relevant range.
Which type of variance causes operating income to be lower than the budgeted operating income? Neutral variance Reverse variance Favorable variance Unfavorable variance
Unfavorable variance