-- Page 3 --

20.
The standard materials cost to produce 1 unit of Product M is 6 pounds of material at a standard price of $50
per pound.
In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound.
What is the overall direct material cost variance?

21.
The Brown Company has decided to purchase some machinery that is expected to produce the following
cash flows: $8,000, $6,000 and $4,000 for years 1 through 3 respectively.
Assuming interest at rate of 6
percent, what is the maximum amount the company should pay for the machinery?
Answer
22.
You recently borrowed $32,000 to purchase a new car and agreed to make annual payments on your loan of
$6,713.52 for 6 years.
What is the interest rate on your loan?

23. Coffer Company is analyzing two projects for the future.
Assume that only one project can be selected.
Project X
Project Y
Cost of machine
$68,000
$60,000
Net cash flow:
Year 1
24,000
4,000
Year 2
24,000
26,000
Year 3
24,000
26,000
Year 4
0
20,000
If the company is using the payback period method and it requires a payback of three years or less, which
project should be selected?

24.
Which of the following interest rates will produce the largest present value?
A.
10%
B.
5%
C.
4%
D.
2%

25.
You are planning on buying a new boat in 4 years and want to have a $5,000 down payment at that time.
the bank pays interest of 3 percent, how much should you deposit in your account today to reach your goal?
If
Answer
-- Page 4 --