Question 1 Which of the following is never included in product cost? Answer over

Question

Question 1

Which of the following is never included in product cost?
Answer


overhead

direct materials

variable selling expense

fixed factory overhead

direct labor


Question 2


Fixed costs that are jointly caused by two or more segments are
Answer


direct fixed costs.

common fixed costs.

total fixed costs.

avoidable fixed expenses.

traceable fixed expenses.

Question 3

The capital investment decision making model that assumes that each cash inflow is reinvested at the required rate of return is
Answer


net present value.

internal rate of return.

payback period.

accounting rate of return.

none of these.


Question4

The best model for choosing the best of several competing projects is
Answer


net present value.

internal rate of return.

payback period.

accounting rate of return.

none of these.


Question 5

One disadvantage of the payback period is that
Answer


it is sometimes used as a crude measure of risk.

managers may choose investments with quick payback periods to maximize short term criteria on which their own bonuses, etc. may be based.

it cannot be used for investments with unequal cash inflows.

it cannot be used if the entire cost of the investment does not occur immediately.

all of these.

Question 6

The reason that a discount factor in year 3 is less than a discount factor in year 2 is that
Answer


cash flows are uneven.

compounding does not occur.

cash flows are even.

present value is positive.

a dollar received in three years is worth less than a dollar received in two years.

Explanation / Answer

1.The overhead cost, direct materials cost, fixed factory cost and direct labor cost or included in product cost only variable selling expense comes under variable selling and administrative expense Head 2.Fixed expenses are broken down into two Categories: • Direct fixed expenses • Common fixed expenses 3.IRR( internal rate of return) assumes reinvestment of interim cash flows in projects with equal rates of return (the reinvestment can be the same project or a different project). Therefore, IRR overstates the annual equivalent rate of return for a project whose interim cash flows are reinvested at a rate lower than the calculated IRR. 4.The NPV decision rule is to accept all positive NPV projects in an unconstrained environment, or if projects are mutually exclusive, accept the one with the highest NPV it also use the time value of money concept it is the best and relevant method to select the mutually exclusive projects 5. Managers may choose investments with quick payback periods to maximize short term criteria on which their own bonuses, etc. may be based 6. A dollar received in three years is worth less than a dollar received in two years. Using the concept of time value of money

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.