Managerial Accounting Chapter 5 & 6

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Quizzes Created: 2 | Total Attempts: 633
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  • 1/20 Questions

    The labor rate variance calculation involves actual direct labor hours used in production. Select one:

    • True
    • False
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About This Quiz

This quiz assesses key concepts in Managerial Accounting from Chapters 5 & 6, focusing on variances, labor rate calculations, and material price standards. It tests understanding of controllable overhead variance, labor efficiency, and material price variance, crucial for effective financial management and decision-making.

Managerial Accounting Chapter 5 & 6 - Quiz

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  • 2. 

    To calculate the controllable overhead variance actual overhead costs are needed. Select one:

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The correct answer is: TRUE
    Factory overhead controllable variance is the difference between actual expenses incurred and the budget allowance based on standard hours allowed for work performed.

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  • 3. 

    Qualitative considerations are as important as cash flow in investment decisions. Select one:

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The correct answer is: TRUE

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  • 4. 

    Acquisition costs include the cash payments that are required for ownership and any subsequent expenditures required to extend the life of the asset such as a major overhaul. Select one:

    • A. TRUE

    • B. FALSE

    Correct Answer
    A. A. TRUE
    Explanation
    The correct answer is: TRUE

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  • 5. 

    Price lists are acceptable source documents in developing materials price standards. Select one:

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The correct answer is: TRUE

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  • 6. 

    Variables common to all investments are: Select one:

    • A. Size

    • B. Duration

    • C. Return

    • D. Timing of the return

    • E. All of the above

    Correct Answer
    A. E. All of the above
    Explanation
    The correct answer is: All of the above

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  • 7. 

    John Guy is saving for a new boat. He needs $60,000. How much money should he put in a savings account that compounds at 8% to have $60,000? (Round to the nearest dollar).

    • A. $36,410

    • B. Unable to determine from data given

    • C. $38,706

    • D. $39,420.

    Correct Answer
    A. B. Unable to determine from data given
    Explanation
    The correct answer is: Unable to determine from data given

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  • 8. 

    Capital gains are tax consequences of the sale of an old asset if Select one:

    • A. The asset is sold for any amount other than the book value

    • B. the asset is sold for less than the book value

    • C. The asset is sold for more than the book value

    • D. The future depreciation is not lost

    • E. The future depreciation is lost

    Correct Answer
    A. C. The asset is sold for more than the book value
    Explanation
    The correct answer is: The asset is sold for more than the book value

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  • 9. 

    If the actual overhead is $152,000 and the flexible budget overhead for actual production is $151,000, the controllable overhead variance is Select one:

    • A. $1000 favorable

    • B. $1000 unfavorable

    • C. 0

    • D. None of the above

    Correct Answer
    A. B. $1000 unfavorable
    Explanation
    The correct answer is: $1000 unfavorable
    Managers use a flexible budget to isolate overhead variances and to set the standard overhead rate. Flexible budgets show the budgeted amount of manufacturing overhead for various levels of output.

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  • 10. 

    The standard for direct labor for product C is three hours at $25 per hour. If the direct labor efficiency variance is $1500 unfavorable, how many units were produced? Select one:

    • A. 200

    • B. 300

    • C. 400

    • D. Unable to tell from data given

    Correct Answer
    A. D. Unable to tell from data given
    Explanation
    The correct answer is: Unable to tell from data given

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  • 11. 

    If an investment’s net present value is zero, then it's IRR must also be zero. Select one:

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The correct answer is: FALSE

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  • 12. 

    Since a firm must outlay cash to acquire assets, their return should be evaluated with the same terms (cash). Select one:

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The correct answer is: TRUE

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  • 13. 

    Unless an addition to working capital is permanent, it should not be considered among the cash flows of a capital budget. Select one:

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The correct answer is: FALSE
    Capital budgeting involves identifying the cash in flows and cash out flows rather than accounting revenues and expenses flowing from the investment. For example, non-expense items like debt principal payments are included in capital budgeting because they are cash flow transactions

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  • 14. 

    Jeff Carter is saving for a new speedboat. The cost is $110,000. How much money must he put in a savings account that compounds at 4% annually to have $110,000 in 7 years? (Round to the nearest dollar).

    • A. $80,206

    • B. $83,589

    • C. $80,606

    • D. 84,218

    Correct Answer
    A. B. $83,589
    Explanation
    The correct answer is: $83,589 . A=P(1+r/n)^nt
    A = final amount
    P = initial principal balance
    r = interest rate
    n = number of times interest applied per time period
    t = number of time periods elapsed

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  • 15. 

    The overhead variance between the actual production and the anticipated production is Select one:

    • A. The overhead volume variance

    • B. The controllable overhead variance

    • C. The flexible budget variance

    • D. None of the above

    Correct Answer
    A. A. The overhead volume variance
    Explanation
    The correct answer is: The overhead volume variance

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  • 16. 

    The standard for direct materials for product A is 6 ft.² at $10 per square foot. If a firm produces 100 units of product A and uses 600 ft.² at $11 per square foot, the materials price variance is Select one:

    • A. $660 unfavorable

    • B. $660 favorable

    • C. $600 unfavorable

    • D. $600 favorable

    Correct Answer
    A. C. $600 unfavorable
    Explanation
    The correct answer is: $600 unfavorable

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  • 17. 

    Activity-based costing gives more information with respect to Select one:

    • A. Direct materials

    • B. Direct labor

    • C. Overhead

    • D. None of the above

    Correct Answer
    A. C. Overhead
    Explanation
    The correct answer is: Overhead
    Activity-based costing (ABC) is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. This model assigns more indirect costs (overhead) into direct costs compared to conventional costing

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  • 18. 

    The standard for direct materials for product A is 6 ft.² at $10 per square foot. If a firm produces 100 units of product A and uses 600 ft.² at $11 per square foot, the materials quantity variance is

    • A. $660 unfavorable

    • B. $660 favorable

    • C. 0

    • D. None of the above

    Correct Answer
    A. C. 0
    Explanation
    The correct answer is: 0
    A material quantity variance is the difference between the actual amount of materials used in the production process and the amount that was expected to be used. The measurement is employed to determine the efficiency of a production process in converting raw materials into finished goods

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  • 19. 

    Standards may be viewed by labor as too loose. Select one:

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The correct answer is: FALSE

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  • 20. 

    If the hurdle rate used to discount a stream of cash flows is raised, the IRR of the cash stream will Select one:

    • A. Always increase

    • B. Always decrease

    • C. Not change

    • D. Increase if the NPV is negative or decrease if the NPV is positive

    Correct Answer
    A. C. Not change
    Explanation
    The correct answer is: Not change, not change; Internal Rate of Return is calculated from the undiscounted cash flows. The discounted rate chosen has absolutely nobearing on IRR

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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jan 31, 2020
    Quiz Created by
    Zach
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