Question 1 of 402.5 PointsCapital Manufacturing designs and ma.docx

Question 1 of 40
2.5 Points
Capital Manufacturing designs and manufactures bathtubs for
home and commercial applications. Capital recorded the
following data for its commercial bathtub production line
during the month of March.
Standard DL hours per tub
3
Standard overhead rate per DL hour
$6.50
Standard overhead cost per unit
$19.50
Actual overhead costs
$22,750
Actual DL hours
3,250
Actual overhead cost per machine hour
$7.00
Actual tubs produced
1,100
What is the variable manufacturing overhead efficiency
variance for March?
A. $1,625 unfavorable
B. $325 unfavorable

C. $1,625 favorable
D. $325 favorable
Question 2 of 40
2.5 Points
Which of the following formulas is used to compute variable
overhead rate (or spending) variance?
A. Actual hours x (actual rate – standard rate)
B. Standard hours allowed x (actual rate – standard rate)
C. Actual rate x (actual hours – standard hours allowed)
D. Standard rate x (actual hours – standard hours allowed)
Question 3 of 40
2.5 Points
How is the direct labor efficiency variance calculated?
A. The difference between the standard labor hours allowed and

the actual labor hours used multiplied by the actual labor rate
B. The difference between the standard labor hours allowed and
the actual labor hours used multiplied by the standard labor rate
C. The difference between the standard labor hours and the
actual labor hours used
D. The difference between the standard labor rate and the actual
labor rate
Question 4 of 40
2.5 Points
Myles Company budgeted 10,500 pounds of direct materials
costing $23.50 per pound to make 5,300 units of product. The
company actually purchased 11,000 pounds of direct materials
costing $25 per pound to make the 5,300 units. What is the
direct materials price variance?
A. $16,500 favorable
B. $16,500 unfavorable
C. $15,750 unfavorable
D. $15,750 favorable

Question 5 of 40
2.5 Points
A company produced 2,200 units of output during a production
process that normally requires 2 hours of labor per unit of
output. The standard labor rate is $16 per hour, but the company
paid $15 per hour. Actual hours needed to complete the
production process were 4,600. How much was the labor rate
variance?
A. $4,400 favorable
B. $4,400 unfavorable
C. $4,600 favorable
D. $4,600 unfavorable
Question 6 of 40
2.5 Points
How is the variable manufacturing overhead efficiency variance
calculated?
A. The difference between the actual overhead rate and the
standard overhead rate multiplied by the standard overhead rate
B. The difference between the standard hours allowed and the

actual hours used multiplied by the standard overhead rate
C. The difference between the standard hours allowed and the
actual hours used
D. The difference between the standard hours allowed and the
actual hours used multiplied by the actual overhead rate
Question 7 of 40
2.5 Points
A company uses a single raw material in its production process.
The standard price for a unit of material is $2. During the month
the company purchased and used 600 units of this material at a
price of $2.25 per unit. The standard quantity required per
finished product is 2 units, and during the month the company
produced 310 finished units. How much was the material
quantity variance?
A. $40 favorable
B. $40 unfavorable
C. $45 favorable
D. $45 unfavorable
Question 8 of 40

2.5 Points
The entry to allocate manufacturing overhead costs to
production involves which of the following?
A. Debit to work-in-process inventory for the actual cost of
overhead
B. Credit to work-in-process inventory for the standard rate of
overhead times the standard quantity of the allocation base
allowed for actual output
C. Credit to work-in-process inventory for the actual cost of
overhead
D. Debit to work-in-process inventory for the standard rate of
overhead times the standard quantity of the allocation base
allowed for actual output
Question 9 of 40
2.5 Points
A company's purchasing department negotiates all of the
purchasing contracts for raw materials. Which variance is most
useful in assessing the performance of the purchasing
department?
A. Materials quantity variance

B. Materials price variance
C. Labor rate variance
D. Labor efficiency variance
Question 10 of 40
2.5 Points
Kahn Performance Nutrition produces a protein shake that
contains whey protein as one of its ingredients. The whey
protein (materials) standards for each batch of protein shake
produced are 12 pounds of whey protein at a standard cost of $3
per pound. During July, Kahn Performance Nutrition purchased
and used 54,000 pounds of whey protein at a total of $170,000
to make a total of 4,300 batches of protein shake. What is the
materials quantity variance for whey protein in July?
A. $7,200 unfavorable
B. $7,200 favorable
C. $141,900 favorable
Question 11 of 40
2.5 Points

All of the following are advantages of using standard costs
EXCEPT:
A. managers can evaluate the efficiency of production workers.
B. differences between the static budget and the flexible budget
can be broken down into price and quantity components.
C. consumer motivation for purchases can be analyzed.
D. standard costing allows companies to create flexible budgets.
Question 12 of 40
2.5 Points
A(n) ________ is a carefully predetermined cost that is usually
expressed on a per unit basis.
A. allocated cost
B. applied cost
C. standard cost
D. flexible cost

Question 13 of 40
2.5 Points
The direct labor price variance was unfavorable and much
greater than anticipated. Who would be in the best position to
explain why the unfavorable variance occurred?
A. Both the production and human resource supervisors
B. The production supervisor
C. The purchasing manager
D. Both the purchasing manager and production supervisor
Question 14 of 40
2.5 Points
The following information describes a company's usage of

direct labor in a recent period.
Actual direct labor hours used
34,000
Actual rate per hour
$17.00
Standard rate per hour
$16.75
Standard hours for units produced
33,500
How much is the direct labor rate variance?
A. $8,375 favorable
B. $8,500 favorable
C. $8,375 unfavorable
Question 15 of 40
2.5 Points
A manager purchased better quality materials for a slightly
higher cost than anticipated. However, as a result, there was
less spoilage than normal. What is the effect on the price and
quantity variances respectively?
A. Favorable, favorable

B. Favorable, unfavorable
C. Unfavorable, favorable
D. Unfavorable, unfavorable
Question 16 of 40
2.5 Points
The two fixed overhead variances are the:
A. budget and volume variances.
B. rate and efficiency variances.
C. price and usage variances.
D. rate and volume variances.
Question 17 of 40
2.5 Points

Jackson Industries has collected the following data for one of
its products.
Direct materials standard (6 pounds per unit @ $0.55/lb.)
$3.30 per finished good
Direct materials flexible budget variance-unfavorable
$12,000
Actual direct materials used
35,000 pounds
Actual finished goods produced
26,000 units
What is the total actual cost of the direct materials used?
A. $19,250
B. $73,800
C. $97,800
D. $85,800
Question 18 of 40
2.5 Points
Which term below is best paired with "The difference between
the actual overhead cost incurred and the flexible budget
amount of overhead cost for actual number of output"?
A. Sales volume variance

B. Flexible budget
C. Overhead flexible budget variance
D. Benchmarking
Question 19 of 40
2.5 Points
Active Lifestyle Beverages gathered the following information
for Job #928.
Standard Total Cost
Actual Total Cost
Direct labor:
Standard: 540 hours at $6.75/hr.
3,645
Actual: 500 hours at $6.50/hr.
3,250
What is the direct labor efficiency variance?
A. $260 favorable
B. $260 unfavorable

C. $270 favorable
D. $270 unfavorable
Question 20 of 40
2.5 Points
Which of the following is NOT an advantage of using standard
costs and variances?
A. Use as a performance benchmark for evaluation of actual
costs
B. Use as a basis for components of the master budget
C. Simplification of bookkeeping
D. Change in behavior of managers to obtain desired variances
Question 21 of 40
2.5 Points
Siesta Manufacturing has asked you to evaluate a capital
investment project. The project will require an initial
investment of $88,000. The life of the investment is 7 years
with a residual value of $4,000. If the project produces net
annual cash inflows of $16,000, what is the accounting rate of

return?
A. 3.90%
B. 4.55%
C. 550%
D. 18.18%
Question 22 of 40
2.5 Points
Eagle Corporation is considering the purchase of a new
machine. The machine costs $550,000 and will generate an
annual net cash inflow of $100,000. What is the payback
period?
A. 4 years and 6 months
B. 5 years
C. 5 years and 6 months
D. 6 years and 1 month

Question 23 of 40
2.5 Points
Which of the following areas does NOT make significant use of
time value of money concepts?
A. Capital investment analysis
B. Lending and borrowing
C. Personal finance planning
D. Marketing research
Question 24 of 40
2.5 Points
A manager wants to know which investment decision will affect
the bottom line of the financial statements according to
Generally Accepted Accounting Principles. Which capital
budgeting method would he choose?
A. Payback method
B. Accounting rate of return method
C. Net present value method

D. Profitability index
Question 25 of 40
2.5 Points
The internal rate of return is:
A. the interest rate at which the net present value of the
investment equals the cost of the investment.
B. the interest rate at which the net present value of the
investment exceeds the company’s desired rate of return.
C. equal to the accounting rate of return.
D. None of the above
Question 26 of 40
2.5 Points
Hincapie Manufacturing is evaluating investing in a new metal
stamping machine costing $30,924. Hincapie estimates that it
will realize $12,000 in annual cash inflows for each year of the
machine's 3-year useful life. The internal rate of return (IRR)
for the machine is approximately:
A. 8%.

B. 10%.
C. 5%.
D. 6%.
Question 27 of 40
2.5 Points
"Management's minimum desired rate of return on an
investment" is best described by which of the following terms?
A. Payback return
B. Internal rate of return
C. Discount rate
D. Net present value
Question 28 of 40
2.5 Points
The following are all methods of analyzing capital investments
EXCEPT:

A. payback period.
B. regression analysis.
C. net present value (NPV).
D. accounting rate of return (ARR).
Question 29 of 40
2.5 Points
Which of the following is NOT a factor when considering the
time value of money?
A. The interest rate
B. The principal amount
C. The payback period
D. The number of periods
Question 30 of 40
2.5 Points
Mantua Motors is evaluating a capital investment opportunity.
This project would require an initial investment of $38,000 to

purchase equipment. The equipment will have a residual value
at the end of its life of $3,000. The useful life of the equipment
is 5 years. The new project is expected to generate additional
net cash inflows of $12,000 per year for each of the 5 years.
Mantua Motors' required rate of return is 14%. The net present
value of this project is closest to:
A. ($1,994).
B. $4,753.
C. $3,196.
D. $28,386.
Question 31 of 40
2.5 Points
Which of the following capital decision methods uses accrual
accounting, rather than net cash flows, as a basis for
calculations?
A. Payback method
B. Internal rate of return
C. Net present value

D. Accounting rate of return
Question 32 of 40
2.5 Points
The term ________ is best described as "a stream of equal
periodic payments."
A. “time value of money”
B. “capital budgeting”
C. “annuity”
D. “payback period”
Question 33 of 40
2.5 Points
You win the lottery and must decide how to take the payout.
Use an 8% discount rate. What is the present value of $15,000 a
year received at the end of each of the next 6 years?
A. $9,450
B. $90,000

C. $74,893
D. $69,345
Question 34 of 40
2.5 Points
The Warren Company is considering investing in two alternative
projects.
Project 1
Project 2
Investment
$400,000
$250,000
Useful life (years)
5
6
Estimated annual net cash inflows for useful life
$100,000
$45,000
Residual value
$25,000
$15,000
Depreciation method
Straight-line
Straight-line
Required rate of return
12%
8%
What is the accounting rate of return for Project 2?

A. 33.67%
B. 3%
C. 18%
D. 2.33%
Question 35 of 40
2.5 Points
All else being equal, a company would choose to invest in a
capital asset if which of the following is true?
A. If the payback period equals the amount invested
B. If the expected accounting rate of return is less than the
required rate of return
C. If the expected accounting rate of return is greater than the
required rate of return
D. If the average amount invested is equal to the net cash

inflows
Question 36 of 40
2.5 Points
Assuming an interest rate of 6%, the present value of $22,000 to
be received 9 years from now would be closest to:
A. $16,434.
B. $13,024.
C. $37,162.
D. $35,068.
Question 37 of 40
2.5 Points
Smith & Cramer Computer Repair is considering an investment
in computer and network equipment costing $254,000. This
equipment would allow them to offer new programming services
to clients. The equipment will be depreciated on the straight-
line basis over an 8-year period with an estimated residual value
of $60,000. Using the accounting rate of return model, what is
the minimum average annual operating income that must be
generated from this investment in order to achieve an 11%
accounting rate of return?

A. $6,600
B. $21,340
C. $31,750
D. $27,940
Question 38 of 40
2.5 Points
What is an attribute of the internal rate of return?
A. It is the interest rate that makes the NPV of the investment
equal to zero.
B. It is the interest rate that makes the cost of the investment
equal to the present value of the investment's net cash inflows.
C. It is used in the capital rationing process.
D. All of the above are attributes of the internal rate of return.
Question 39 of 40
2.5 Points
Mulheim Corporation is deciding whether to automate one phase
of its production process. The equipment has a 6-year life and
will cost $410,000. Projected net cash inflows from the

equipment are as follows.
Year 1
$120,000
Year 2
$100,000
Year 3
$110,000
Year 4
$100,000
Year 5
$95,000
Year 6
$90,000
Mulheim Corporation's hurdle rate is 12%. Assume the residual
value is zero.
What is the net present value of the equipment?
A. $(18,275)
B. $3,046
C. $20,000
D. $18,275
Question 40 of 40

2.5 Points
Which of the following decision rules is a correct statement?
A. If the net present value is positive, do not invest in the
capital asset.
B. If the internal rate of return is less than the required rate of
return, invest in the asset.
C. Investments with longer payback periods are more desirable,
all else being equal.
D. If the net present value is positive, invest in the capital asset.

Question 1 of 402.5 PointsCapital Manufacturing designs and ma.docx

Recommandé

Recommandé

Contenu connexe

Similaire à Question 1 of 402.5 PointsCapital Manufacturing designs and ma.docx

Similaire à Question 1 of 402.5 PointsCapital Manufacturing designs and ma.docx (18)

Plus de IRESH3

Plus de IRESH3 (20)

Dernier

Dernier (20)

Question 1 of 402.5 PointsCapital Manufacturing designs and ma.docx