Question

1) The sum of the variable overhead spending variance, the variable overhead efficiency variance, and the fixed overhead spending variance is the:

Select one:

a. Production variance.

b. Quantity variance.

c. Volume variance.

d. Price variance.

e. Controllable variance.

2)

Capital budgeting decisions are risky because:

Select one:

a. The outcome is uncertain.

b. Large amounts of money are usually involved.

c. The investment involves a long-term commitment.

d. The decision could be difficult or impossible to reverse.

e. All of these are true

3)The contribution margin per unit is equal to the sales price per unit minus the variable costs per unit.

Select one:

True

False

4)Use of the internal rate of return method cannot be used with uneven cash flows.

Select one:

True

False

5)The dollar amount of sales needed to achieve a target after-tax income is computed by dividing the sum of fixed costs plus the desired after-tax income plus income taxes by the contribution margin ratio.

Select one:

True

False

Answer 1

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1) The sum of the variable overhead spending variance, the variable overhead efficiency variance, and the fixed overhead spending variance is the:
e. Controllable variance.
2) Capital budgeting decisions are risky because:
e. All of these are true
3) The contribution margin per unit is equal to the sales price per unit minus the variable costs per unit.
TRUE
4) Use of the internal rate of return method cannot be used with uneven cash flows.
FALSE
5) The dollar amount of sales needed to achieve a target after-tax income is computed by dividing the sum of fixed costs plus the desired after-tax income plus income taxes by the contribution margin ratio.
TRUE