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C) Allow For Normal Spoilage
C) Allow For Normal Spoilage
Stiner Company has a materials price standard of $2.00 per pound. Five thousand pounds
of materials were purchased at $2.20 a pound. The actual quantity of materials used was
5,000 pounds, although the standard quantity allowed for the output was 4,500 pounds.
= $1,000 U
= $1,000 U
= $1,000 + $1,000
= $2,000 U
5. Which of the following will increase the net present value of a project?
A) An increase in the initial investment.
B) A decrease in annual cash inflows.
C) An increase in the discount rate.
D) A decrease in the discount rate.
7. All of the following are involved in the capital budgeting evaluation process except a
company’s
A) board of directors.
B) capital budgeting committee.
C) officers.
D) stockholders.
8. The primary capital budgeting method that uses discounted cash flow techniques is the
A) net present value method.
B) cash payback technique.
C) annual rate of return method.
D) profitability index method.
12. The cash payback period is computed by dividing the cost of the capital investment
by the
A) annual net income.
B) net annual cash inflow.
C) present value of the cash inflow.
D) present value of the net income.
19. The standard direct materials quantity does not include allowances for
A) unavoidable waste.
B) normal spoilage
C) unexpected spoilage
D) all of the above are included.
22. When a capital budgeting project generates a positive net present value, this means
that the project earns a return higher than the
A) internal rate of return.
B) annual rate of return.
C) required rate of return.
D) profitability index.
D) standards are excluded from the cost accounting system, whereas budgets are
generally incorporated into the cost accounting system.