quiz questions

If the net present value of a project is zero based on a discount rate of 16%, then the internal rate of return is:

equal to 16%.

Which of the following is NOT a period cost?

Depreciation of factory maintenance equipment.

Which of the following would not be included in operating assets in return on investment calculations?

Factory building rented to (and occupied by) another company.

Which of the following statements is NOT correct concerning the Cash Budget?

It is not necessary to prepare any other budgets before preparing the Cash Budget.

Which of the following statements about product costs is true?

Product costs associated with unsold finished goods and work in process appear on the balance sheet as assets.

The general model for calculating a quantity variance is:

Standard price × (Actual quantity of inputs used − Standard quantity allowed for output).

Which of the following statements is NOT correct concerning the Manufacturing Overhead Budget?

The Manufacturing Overhead Budget shows only the variable portion of manufacturing overhead.

Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory?

The amount paid to the individual who stains a chair.

In a flexible budget, what will happen to fixed costs as the activity level increases?

The fixed cost per unit will decrease.

Break-even analysis assumes that:

Unit variable expense is constant.

The salary paid to the president of a company would be classified on the income statement as a(n):

administrative expense.

Costs that can be eliminated in whole or in part if a particular business segment is discontinued are called:

avoidable costs

Some investment projects require that a company increase its working capital. Under the net present value method, the investment and eventual recovery of working capital should be treated as:

both an initial cash outflow and a future cash inflow.

Direct costs:

can be easily traced to a particular cost object.

Product costs that have become expenses can be found in:

cost of goods sold.

All of the following are examples of product costs except:

depreciation on the company's retail outlets.

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is favorable, the variable overhead efficiency variance will be:

favorable

sales budget

first to be prepared

A budget that is based on the actual activity of a period is known as a:

flexible budget.

A preference decision in capital budgeting:

is concerned with determining which of several acceptable alternatives is best.

If a company increases its selling price by $2 per unit due to an increase in its variable labor cost of $2 per unit, the break-even point in units will:

not change.

The production department should generally be responsible for materials price variances that resulted from:

rush orders arising from poor scheduling.

Which of the following costs are always irrelevant in decision making?

sunk costs

When manufacturing overhead is applied to production, it is added to:

the Work in Process account.

Accepting a special order will improve overall net operating income if the revenue from the special order exceeds:

the incremental costs associated with the order.

The usual starting point for a master budget is:

the sales forecast or sales budget

A favorable labor rate variance indicates that

the standard rate exceeds the actual rate.

In activity-based costing, the activity rate for an activity cost pool is computed by dividing the total overhead cost in the activity cost pool by:

the total activity for the activity cost pool.

An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because:

under activity-based costing some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products.

Within the relevant range, variable costs can be expected to:

vary in total in direct proportion to changes in the activity level.