Which of the following is a common cash flow? (Points : 3) The ready money purch

ID: 2471785 • Letter: W

Question

Which of the following is a common cash flow? (Points : 3)        The ready money purchase price of new assets
       Revenues from sales on account
       Operating costs incurred using a company credit card
       Using the barter system to trade an existing asset for an equivalent one Question 2.2. Which is a capital budgeting technique that ignores present value? (Points : 3)        Internal rate of return
       Accounting rate of return
       Net present value
       Discounted payback period Question 3.3. What are the two characteristics of relevant information for decision making? (Points : 3)        It improves the bottom line, and it allows performance bonuses for executives.
       It eliminates doubt about the correct decision, and it motivates employees.
       It differs between alternatives under consideration; and the differences occur in the future.
       It eliminates the need to consider the time value of money and it reduces processing time. Question 4.4. What are some potential causes of the variable overhead spending or efficiency variances? (Points : 3)        Paying more or less for variable overhead items than budgeted or using variable overhead items more or less efficiently than the standard allows or both.
       The variable overhead efficiency variance results from using the variable overhead activity base more or less efficiently than allowed by the standard.
       If variable overhead truly varies with this activity base, then as use of the activity base goes up or down, variable overhead costs will go up or down with it.
       The fixed overhead spending variance results simply from spending more or less than budgeted on fixed overhead items. Question 5.5. Which is accurate concerning the standard cost? (Points : 3)        The cost most similar companies would charge
       It is indeterminable
       The expected cost to manufacture one unit of output
       It is the cost basis generally accepted for use in the industry.

Explanation / Answer

Operating costs incurred using a company credit card

This is the cost incurred on converting the credit card sales on account and hence the cost common cash flow

Accounting rate of return

It is simply the annual net cashflow divided by initial investment it does not take time value of money into consideration

It differs between alternatives under consideration; and the differences occur in the future

Relevant information is the information that helps in deciding between the two different alternatives

4) Paying more or less for variable overhead items than budgeted or using variable overhead items more or less efficiently than the standard allows or both

Variable overhead spending variance = (AR- SR) AH

Variable efficiency variance = (AH- SH ) SR

5) The expected cost to manufacture one unit of output

Standard cost are used to predetermined the cost of unit