For a typical capital investment project, the bulk of the investment-related cash outflow occurs: 14 Multiple Choice 02:37:21 During the initiation stage of the project (i.e., at time period 0). During neither the initiation stage nor the operation stage During the operation stage of the project (i.e., after time period O) Evenly during all three stages: initiation, operation, and final disposal. Either during the initiation stage or the operation stage Which of the following is not a characteristic of the payback method for making capital budgeting decisions? 15 Multiple Choice 02:37:12 It requires estimates of after-tax cash inflows and after-tax cash outflows. It can be considered a rough measure of risk. It is easy to calculate and comprehend. It focuses primarily on liquidity, rather than profitability, of an investment project. It considers returns over the entire life of the project. Which one of the following statements concerning capital budgeting is not true? 16 Multiple Choice 02:36:56 Capital budgeting involves estimating the revenues and costs of each proposed project, evaluating their merits, and choosing those worthy of investment. Because of the existence of advanced forecasting techniques, capital budgeting is based on precise estimates of future events. A basic objective underlying capital budgeting is to select assets that will earn a satisfactory return Capital budgeting is the process of identifying, evaluating, selecting, and controlling long-term investment projects. Capital budgeting uses after-tax cash flows in the analysis of proposed investments Minmax Co.s direct labor information for February is as follows: 17 36,000 37,500 10,800 $514,800 Direct labor hours worked (AQ) Standard direct labor hours for units manufactured (SO) Unfavorable direct labor rate variance Total payroll for direct labor The actual direct labor rate per hour (AP) (rounded to two decimal places) for February was: 1 7 Multiple Choice $14.00 02:36:29 $14.30. $14.02 $14.60 $13.73 Marv Company's direct labor costs for manufacturing its only product were as follows for October: Standard direct labor hours per unit of product Budgeted finished units for the period 2.0 6,800 5,200 $28.00 $299,000 $ 26.00 2314 Actual number of finished units produced Standard wage rate per direct labor hour (SP) Direct labor costs incurred Actual wage rate per direct labor hour (AP) The direct labor rate variance for October, rounded to the nearest dollar, was: The direct labor rate variance for October, rounded to the nearest dollar, was: 18 Multiple Choice 02:31:02 $20,400 favorable. $2,200 unfavorable $51,200 unfavorable. $30,800 unfavorable. $23,000 favorable. Traditional financial control systems have recently been criticized because: 20 Multiple Choice 02:30:29 They generally lead to goal-congruent behavior on the part of managers. They use flexible, not static, budgets They provide performance data on a real-time basis They fail to incorporate nonfinancial performance indicators into the evaluation process. They focus more in improving basic business processes than short-term financial results
