16. If variable overhead is applied on the basis of direct labor-hours and the v

Question

16. If variable overhead is applied on the basis of direct labor-hours and the variable overbead rate variance is favorable, then: actual variable overhead rate exceeded the standard rate. tandard variable overhead rate exceeded the actual rate. c. actual direct labor-hours exceeded the standard direct labor-hours allowed for the actual output. d. standard direct labor-hours allowed for the actual output exceeded the actual hours. 17. A division of a company should be closed down if a. its variable and direct fixed costs are consistently higher than corporate fixed costs b. its segment margin is consistently lower than corporate fixed costs. e. its contribution margin is consistently lower than its segment margin. d) its revenues are consistently lower than its variable and direct fixed costs. 18. In a balanced scorecard, which one of the following would most likely be categorized as a measure of performance from the customer perspective? a. employee turnover b. return on equity (c) number of returns d. % machine downtime 19. The total-cost approach and the incremental-cost approach to evaluating two competing investment opportunities: a. are dissimilar in that one deals with net present value and the other deals with internal rate of return. b) are similar in that they will recommend the same alternative as the best. c. are dissimilar in that one uses the cost of capital as a discount rate and the other does not. d. are similar in that neither considers the time value of money.

Explanation / Answer

Answer 16

b) Standard variable overhead rate exceeds the actual rate

Explanation : A favourable variable overhead rate variance means standard rate is more than the actua rate . It indicates that the actual expenses incurred is less than the planned amout of expense.

Answer 17

d) if its revenues are consistently lower than its variable costs and direct fixed cost

Explanation : If revenues are lowern than its varaiable cost than on consitent basis that means the marginal sales are not enough to cover its marginal expense & direct fixed cost . In such cases its better to shut down the division in order to avoid negative contribution margin.

Answer 18

c) Number of return

Explanation : In blance scorecard coustomer prospective includes customer satisfaction ie how the customers feels about the product or the company. Number of returns not only help indetection of defects but also measures consumer satisfaction.

Answer 19

b) are similar in that they will recommend the same alternative as the best

Explanation : In both total-cost approach and the incremental-cost approach the alternative with the least cost or is considerd as best alternative

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