Management Accounting - Study Mode

[#201] If flexible budget variance is $105000, actual cost is $65000 then flexible budget cost will be
Correct Answer

(A) $40,000

Explanation

Solution: Flexible budget cost = Flexible budget variance - Actual cost = $105000 - $65000 = $40000.

[#202] An actual input quantity is 200 units and budgeted input quantity is 50 units, then efficiency variance will be
Correct Answer

(C) 150 units

Explanation

Solution: Efficiency variance = Actual input quantity - Budgeted input quantity = 200 units - 50 units = 150 units.

[#203] Depreciation on plant equipment, salaries of plant managers and plant leasing costs are considered a
Correct Answer

(D) fixed overhead cost

Explanation

Solution: Depreciation on plant equipment, salaries of plant managers and plant leasing costs are considered a fixed overhead cost. Fixed overhead costs are costs that do not change even while the volume of production activity changes. Fixed costs are fairly predictable and fixed overhead costs are necessary to keep a company operating smoothly.

[#204] Current assets are subtracted from current liabilities to calculate
Correct Answer

(B) working capital

Explanation

Solution: Current assets are subtracted from current liabilities to calculate working capital. Working capital, also known as net working capital (NWC), is the difference between a company's current assets, such as cash, accounts receivable (customers' unpaid bills) and inventories of raw materials and finished goods, and its current liabilities, such as accounts payable.

[#205] An investment is multiplied to required rate of return to calculate
Correct Answer

(D) imputed cost of investment

Explanation

Solution: An investment is multiplied to required rate of return to calculate imputed cost of investment. An imputed cost is a cost that is incurred by virtue of using an asset instead of investing it or undertaking an alternative course of action. An imputed cost is an invisible cost that is not incurred directly, as opposed to an explicit cost, which is incurred directly.