Posted: April 19th, 2016

A variance is the difference between actual costs??

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.

18. Fixed costs classified according to the time frame perspective are known as:
A. direct cost and indirect cost.
B. constant and inconsistent cost.
C. committed cost and discretionary cost.
D. product cost and period cost.

19. How is performance evaluated for a cost center?
A. Actual costs incurred compared to budgeted costs.
B. Actual segment margin compared to budgeted segment margin.
C. Comparison of actual and budgeted return on investment (ROI) based on segment margin and assets
controlled by the segment.
D. None of the above.

20. A sunk cost is a cost that:
A. has been incurred and cannot be eliminated.
B. is never relevant in decision-making.
C. is never a differential cost.
D. all of the above.

21. The development of the operating budget is complete when:
A. the sales forecast for next year is complete.
B. the budgeted cash flow statement is complete.
C. the budgeted income statement is complete.
D. the budgeted balance sheet is complete.

22. A variance is the difference between actual costs and:
A. selling price.
B. expected costs.
C. activity-based costs.
D. historical costs.

23. Which of the following is not an important qualitative factor to consider in the capital budgeting decision?
A. Regulations that mandate investment to meet safety, environmental, or access requirements.
B. Technological developments within the industry may require new facilities to maintain customers or
market share at the cost of lower ROI for a period of time.
C. Commitment to a segment of the business that requires capital investments to achieve or regain
competitiveness even though that segment does not have as great an ROI as others.
D. All of the above are important qualitative factors to consider.