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8. At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000.1f $37,400 are incurred at 18,400 direct labor hours, the flexible budget

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8. At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000.1f $37,400 are incurred at 18,400 direct labor hours, the flexible budget report should show the following difference for indirect materials: A) $1,400 unfavorable. B) $1,400 favorable. C) $600 favorable D) 5600 unfavorable. 9. Giraldi Company has identified that the cost of a new compater will be $48,000, but with the use of the new computer, net income will increase by $5,000 a year. If depreciation expense is $3,000 a year, the cash payback period is: A) 24.0 years. B) 16.0 years C) 9.6 years. D) 6.0 years. Which one of the following will not increase return on investment? A) B) C) D) 10. Variable costs are increased An increase in sales Average operating assets are decreased Variable costs are decreased Use the following to answer question 11: Cleaners, Inc. is considering purchasing equipment costing $60,000 with a 6-year useful life. The equipment will provide cost savings of $14,600 and will be depreciated straight-line over its useful life with no salvage value. Cleaners requires a 10% rate of return. Present Value of an Annuity of 1 Period 8% 9% 10% -1% 12% -5% 6 4.623 4.486 4.355 4.231 4.111 3.784 11. What is the approximate profitability index associated with this equipment? A) 1.23 B) 1.03 C) 1.06 D) .73 The overhead controllable variance is the difference between the A) budgeted overhead based on standard hours allowed and the overhead applied to 12. production. budgeted overhead based on standard hours allowed and budgeted overhead based B) on actual hours worked. C) actual overhead and the overhead applied to production. D) actual overhead and budgeted overhead based on standard hours allowed. Page 4 Version 2

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