Posted: July 17th, 2016

Which of the following statements is true regarding the payback period?

13. When analyzing end of period production cost variances, which of the following product cost components will not need “flexing”?
A. direct material.
B. direct labor.
C. variable manufacturing overhead.
D. fixed manufacturing overhead.

14. The operating expense budget is based on the:
A. sales budget.
B. production budget.
C. manufacturing overhead budget.
D. cash budget.

15. Sometimes when management decisions are reached the investment project with the highest NPV or IRR is not selected. This occurs because:
A. a lower IRR is a less risky investment.
B. the highest NPV is not necessarily the highest IRR.
C. qualitative factors override quantitative analysis techniques.
D. sometimes management makes the wrong decision.

16. If the net variance of a business using standard costing is significant relevant to total production cost, the net variance should be:
A. assigned to cost of goods sold.
B. allocated between work in process, finished goods, and cost of goods sold.
C. carried forward to the next accounting period.
D. none of the above.

17. Which of the following statements is true regarding the payback period?
A. The time value of money is considered when calculating the payback.
B. The payback analysis is more accurate than the net present value analysis.
C. The payback period is less accurate than the accounting rate of return.
D. The time value of money is not considered when calculating the payback.