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BUS 202 Test 3 Sec-1

# BUS 202 Test 3 Sec-1 - BUS 202 Test 3 Sample Student 1 1...

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BUS 202 Test 3 Sample Student: ___________________________________________________________________________ 1

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1. The budget for May called for production of 9,000 units. Actual output for the month was 8,500 units with total direct materials cost of \$127,500 and total direct labor cost of \$77,775. The direct labor standards call for 45 minutes of direct labor per unit at a cost of \$12 per direct labor-hour. The direct materials standards call for one pound of direct materials per unit at a cost of \$15 per pound. The actual direct labor-hours were 6,375. Variance analysis of the performance for the month of May would indicate: A. \$7 ,5 00 fa vo ra bl e m ate ria ls qu an tit y va ria nc e. B. \$1 ,2 75 fa vo ra bl e dir ect la bo r eff ici en cy va ria nc e. 2
2. Elliott Company makes and sells a single product. Last period the company's labor rate variance was \$14,400 U. During the period, the company worked 36,000 actual direct labor-hours at an actual cost of \$338,400. The standard labor rate for the product in dollars per hour is: A. \$9 .4 0 B. \$9 .0 0 C. \$8 .5 0 D. \$8 .1 0 3

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3. A preference decision: A. is co nc er ne d wi th w he th er a pr oj ect cle ars th e mi ni m u m re qu ire d rat e of ret ur n hu rdl e. B. co m es be fo re th e scr 4
4. In calculating the "investment required" for the project profitability index, the amount invested should be reduced by any salvage recovered from the sale of old equipment. True False 5. (Ignore income taxes in this problem.) Virginia Company invested in a four-year project. Virginia's discount rate is 10%. The cash inflows from this project are: Assuming a positive net present value of \$1,000, the amount of the original investment was closest to: 5

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6. Residual income is: A. Ne t op er ati ng in co m e pl us th e mi ni m u m re qu ire d ret ur n on av er ag e op er ati ng as set s. B. Ne t op er ati ng in co m 6
7. Amster Corporation has not yet decided on the required rate of return to use in its capital budgeting. This lack of information will prevent Amster from calculating a project's: 7

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8. The following information relates to next year's projected operating results of the Children's Division of Grunge Clothing Corporation: If Children's Division is dropped, half of the fixed costs above can be eliminated. What will be the effect on Grunge's profit next year if Children's Division is dropped instead of being kept? 8

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