Question

8. Normal standards: Allow for rest period, machines breakdowns, and setup time Represent levels of performance under perfect operating conditions Are rarely used because managers believe they lower workforce morale Are more likely than ideal standards to result in unethical practices 9. The setting of standards is: a. A managerial accounting decision b. A management decision CA worker decision d. Preferably set at the ideal level of performance 10. Each of the following formula is correct EXCEPT: a Labor price variance = ( Actual hours x Actual rate) - (Actual hours x Standard rate) b. Overhead controllable variance = Actual overhead - Overhead budgeted c. Materials price variance (Actual quantity x Actual Price) - (Standard Quantity x Standard Price) d. Overhead volume variance Fixed overhead rate x (Normal capacity hours - Standard hours allowed) 11. In using variance report to evaluate cost control, management normally looks into: a. All variances b. Favorable variances only c. Unfavorable variances only d. Both favorable and unfavorable variances that exceed a predetermined quantitative percentage or dollar amount. 12. In a make or buy decision, relevant costs are: a. Manufacturing costs that will be saved b. The purchase price of the units C. Opportunity costs d. All of the above. 13. The decision rule in a sell or process further decision is: Process further as long as the incremental revenue from processing exceeds a. Incremental processing costs b. Variable processing costs c. Fixed processing costs d. No correct answer is given 14. A project should be accepted if its internal rate of return exceeds: a Zero b. The rate of return on a government bond c. The company's required rate of return d. The rate the company pays for borrowed funds, 15. A positive net present value means that the a. Project's rate of return is less than the cutoff rate b. Project's rate of return exceeds the required rate of return c Project's rate of return equals the required rate of return

Answer 1

8) a. Allow for rest period, machines breakdown, and set up time.

9) b. A management decision

10) c. Material price variance =(Actual quantity * actual price) - (Standard quantity *standard price)

11) d. Both favourable and unfavourable variances that exceed a predetermined quantitative percentage or dollar amount

12) d. All of the above

13) a. Incremental processing cost

14) c. The company's required rate of return

15) b. Project's rate of return exceeds the required rate of return