Managerial Accounting Exam 2
The formula for calculating the variable overhead efficiency variance is
(AH-SH) x SVOR
Tina invested in a project with a payback period of 4 years. The project brings $20,000 per year for a period of 10 years. What was the initial investment?
4 years x $20,000 = $80,000 initial investment
The total fixed overhead variance is calculated by the following formula:
Actual Fixed Overhead - (Standard Fixed Overhead Rate X Standard Hours Allowed)
Which of the following is used to calculate the fixed overhead spending variance?
Actual Fixed Overhead-Budgeted Fixed Overhead
Managers may use the accounting rate of return to evaluate potential investment projects because
All of these: -Debt contracts require that a firm maintain certain ratios -bonuses to managers may be based on accounting income -it serves as a screening measure
This is the person responsible for directing and coordinating the organization's overall budget process.
Budget Director
Which of the following is an operating budget?
Budgeted income statement
Which of the following is a use of budgets for control?
Budgets set a standard against which results can be compared.
Which of the following is true of participative budgeting?
It gives an opportunity to build slack into the budgets.
Which of the following is true of a normal costing system?
It predetermines the overhead costs for product costing.
During April, a small roofing company purchased 400 bundles of a certain type of shingle at a price of $40 per bundle, $5 more than the standard price. The standard quantity of this type of shingle is 440 bundles. What is the journal entry to record the purchase of materials?
Materials: 14,000 Materials Price Variance: 2,000 Accounts Payable: 16,000
Direct materials needed for production is calculated by:
Multiplying units to be produced by direct materials per unit
Which of the following refers to a follow-up analysis of a capital project once it is implemented?
Postaudit
The two variances for variable overhead are
Spending and efficiency variances
Which of the following refers to the minimum acceptable rate of return?
The cost of capital
Which capital investment decision model is based on the time required for a firm to recover its original investment?
The payback period
Which of the following is not true?
The production budget is prepared in units and dollars
Which of the following is true if net present value (NPV) is negative?
The return on the investment is less than the discount rate.
Which of the following is true if net present value (NPV) is negative?
The return on the investment will be less than the discount rate.
In preparing the overhead budget, many companies use
a unit-based driver such as direct labor hours
Standard cost systems can enhance operational control through the use of:
efficiency variances which indicate the need for corrective action
Which budget is used to assess managerial efficiency?
flexible budget
One disadvantage of the payback period is that
managers may choose investments with quick payback periods
Looking ahead to see what actions should be take to realize particular goals is:
planning
The ______ shows the quantity of each input that should be used to produce one unit of output
standard cost sheet
The variable overhead spending variance is expressed as the difference between:
the actual variable overhead and the budgeted variable overhead based on actual hours used to produce the actual output
Responsibility for the variable overhead spending variance is usually assigned to
the production department
