16.The predetermined overhead rate for Zane Company is $5,comprised of a variable overhead rate of $3 and a fixed rate of $2.The amount of budgeted overhead costs at normal capacity of$150,000 was divided by normal capacity of 30,000 direct labor hours,to arrive at the predetermined overhead rate of $5.Actual overhead for June was 9,500 variable and 6,050 fixed,and standard hours allowed for the product porduced in June was3,000 hours.The total overhead variance is
17.The predetermined overhead rate for Zane Company is $5,comprised of a variable overhead rate of $3 and a fixed rate of $2.The amount of budgeted overhead costs at normal capacity of$150,000 was divided by normal capacity of 30,000 direct labor hours,to arrive at the predetermined overhead rate of $5.Actual overhead for June was$8,900 variable and 5,400fixed,and 1,500 units were produced.The direct labor standard is 2hours per unit produced.The total overhead variance is
18.Which of the following is true?
a.The form,content,and frequency of variance reports vary considerably among companies
b.The form,content,and frequency of variance reports do not vary among companies
c.The form and content of variance reports vary considerably among companies,but the frequency is always weekly
d.The form and content of variance reports are consistent among companies,but the frequency varies
19.Denmark Corporation’s variance report for the purchasing department reports1,000 units of material A purchased and 2,400 units of material B purchased.It also reports standard prices of$2 for material A and $3 for Material B.Actual prices reported are$2.10 for Material A and $2.80 for Material B.Denmark should report a total price variance of
20.When is a variance considered to be’material’?
a.when it is large compared to the actual cost
b.when it is infrequent
c.when it is unfavorable
d.when it could have been controlled more effectively
21.Variance reports are
a.external financial reports
b.SEC financial reports
c.internal reports for management
d.all of these
22.The following information was taken from the annual manufacturing overhead cost budget of Fergie Manufacturing
Variable manufacturing overhead costs$92,400
Fixed manufacturing overhead costs55,440
Normal production level in labor hours30,800
Normal production level in units5,775
Standard labor hours per unit 4
During the year,5,600 units were produced,18,340 hours were worked, and the actual manufacturing overhead was $151,200.Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs.Overhead is applied on the basis of direct labor hours.
22-1.Fergie’s total overhead variance is 7840U
22-2.Fergie’s controllable overhead variance is 6160U
22-3.Fergie’s volume overhead variance is
23.Use the following table,
Present Value of and Annuity of 1
Period 8% 9% 10%
1 .926 .917 .909
2 1.783 1.759 1.736
3 2.577 2.531 2.487
A company has a minimum required rate of return of 9%.It is considering investing in a project which costs#350,000 and is expected to generate cash inflows of $140,000 at the end of each year for three years.The net present value of this project is
24.The discount rate is referred to by all of the following alternative names except the
a.accounting rate of return
d.required rate of return
25.The rate that a company must pay to obtain funds from creditors and stockholders is known as the
b.cost of capital
d.all of these
26.The higher the risk element in a project,the
a.more attractive the investment
b.higher the net present value
c.higher the cost of capital
d.higher the discount rate
27.If a company’s required rate of return is 10%and, in using the net present value method,a project’s net present value is zero,this indicates that the
a.project”s rate of return exceeds10%
b.project’s rate of return is less than the minimum rate required
c.porject earns a rate of return of 10%
d.project earns a rate of return of 0%
28.If a preoject has a profitability index of1.20,then the project’s internal rate of return is
a.equal to the discount rate
b.less than the discount rate
c.greater than the discount rate
d.equal to 20%
31.which one of the following affects cash during a period?
a.Recording depreciation expense
b.Declaration of a cash dividend
c.write-off of an uncollectible account receivable
d.Payment of an accounts payable
32.In calculating cash flows from operating activities using the indirect method,a gain on the sale of equipment is
a.added to net income
b.deducted from net income
c.ignored because it does not affect cash
d.not reported on a statement of cash flows
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