7. Sales commissions are classified as

overhead costs.

period costs.

product costs.

indirect labor.

44.A companys planned activity level for next year is expected to be 100000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs:

Variable		Fixed
Indirect materials	$ 190000		Depreciation	$ 37500
Indirect labor	220000		Taxes	7500
Factory supplies	23000		Supervision	30000

A flexible budget prepared at the 90000 machine hours level of activity would show total manufacturing overhead costs of

$ 389700.

$ 457200.

$ 464700.

$ 433000.

45.Given below is an excerpt from a management performance report:

	Budget	Actual	Difference
Contribution margin	$700000	$660000	$40000 U
Controllable fixed costs	$300000	$340000	$40000 U

The managers overall performance

is 20% above expectations.

is 20% below expectations.

is equal to expectations.

cannot be determined from the information provided.

47.Bramble Corp.has a materials price standard of $2.00 per pound. 4600 pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 4600 pounds, although the standard quantity allowed for the output was 4300 pounds. Bramble Corp.'s total materials variance is

$1520 U.

$1520 F.

$1580 U.

$1580 F.

50.Blossom Company is considering the purchase of a machine with an estimated useful life of 5 years with the following data:

Initial cost	$ 200000
One-time training cost	24800
Annual maintenance costs	20000
Annual cost savings	100000
Salvage value	26000

The cash payback period is

2.28 years.

2.81 years.

2.66 years.

2.50 years.

51.If an asset costs $ 180000 and is expected to have a $ 36000 salvage value at the end of its 10-year life, and generates annual net cash inflows of $ 36000 each year, the cash payback period is

5 years.

6 years.

3 years.

4 years.

56.The following information is available for a potential investment for Panda Company:

Initial investment	$ 105000
Net annual cash inflow	20000
Net present value	41150
Salvage value	10000
Useful life	10 yrs.

The potential investments profitability index is

2.55.

1.39.

5.25.

3.44.

57.MarigoldInc. is comparing several alternative capital budgeting projects as shown below:

	Projects
	A	B	C
Initial investment	$ 64000	$ 104000	$ 144000
Present value of net cash flows	74000	94000	184000

Using the profitability index, how many of the projects are acceptable?

2

3

0

1

58.CheyenneCompany is considering two capital investment proposals. Estimates regarding each project are provided below:

	Project Soup	Project Nuts
Initial investment	$ 540000	$ 740000
Annual net income	50000	46000
Net annual cash inflow	162000	180000
Estimated useful life	5 years	6 years
Salvage value	0	0

The company requires a 10% rate of return on all new investments.

	Present Value of an Annuity of 1
Periods	9%	10%	11%	12%
5	3.89	3.791	3.696	3.605
6	4.486	4.355	4.231	4.111

The internal rate of return for Project Nuts is approximately

11%.

9%.

12%.

10%.

59.In using the internal rate of return method, the internal rate of return factor was 4 and the equal annual cash inflows were $ 11000. The initial investment in the project must have been

$ 44000.

$ 11000.

$ 27500.

$ 22000.

60.A project has annual income exclusive of depreciation of $ 92000. The annual rate of return is 15% and annual depreciation is $ 23000. There is no salvage value. The internal rate of return is 12%. The initial cost of the project was

$ 460000.

$ 920000.

$ 575000.

$ 1150000.