When auto manufacturer BMW purchased the Rolls-Royce brand name, BMW has to hire and train a new staff of assembly workers. The new workers were paid $25 per hour, worked a total of 7,500 hours, and produced 2,000 cars. BMW budgeted for a standard labor rate of $27 per hour and 1.25 direct labor hours per car. What is the direct labor efficiency variance for the Rolls-Royce division? A) $125,000 unfavorable B) $135,000 favorable C) $135,000 unfavorable D) $125,000 favorable All of the following are advantages of using standard costs except A) consumer motivation for purchases can be analyzed. B) standard costing allows companies to create flexible budgets. C) managers can evaluate the efficiency of production workers. D) differences between the static budget and the flexible budget can be broken down into price and quantity components. If the accounting rate of return exceeds the required accounting rate of return. A) only invest if the payback period is also less than the required rate of return. B) do not invest in the capital asset. C) invest in the capital asset. D) only invest if the payback period is also greater than the required rate of return. How does depreciation affect the calculation of a project's accounting rate of return (ARR)? A) Depreciation is only deducted if the ARR is less than the minimum required rate of return. B) Depreciation does not affect ARR. C) Depreciation is deducted from the annual cash inflows. D) Depreciation is added to the annual cash inflows. Use the following information for question 24 & 25. Gomez Corporation is considering two alternative investment proposals with the following data: How long is the payback period for Proposal Y and based on the payback period which proposal would you choose? A) 6.80 years and Proposal X B) 6.00 years and Proposal Y C) 9.75 years and Proposal X D) 6.00 years and Proposal X What is the accounting rate of return (ARR) for Proposal Y and based on the ARR which proposal would you choose A) 4.17% and Proposal X B) 12.5 and Proposal Y C) 4.17% and Proposal Y D) 16.67% and Proposal Y