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Multiple Choice Accounting Questions

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9. How is performance evaluated for a profit center?
a. Actual costs incurred compared to budgeted costs.
b. Actual segment margin compared to budgeted segment margin.
c. Comparison of actual and budgeted return on investment (ROI) based on segment margin and assets controlled by the segment.
d. None of the above.

10. Val's travel budget for October was $720, based on her plan to drive 3,000 miles at a cost of $0.24 per mile. During October, she actually drove 2,800 miles at a total cost of $700. A flexed budget performance report would show a variance of:
a. $30 U
b. $50 F
c. $20 F
d. $28 U

11. ______________ can be measured as the income that could have been earned on an asset, based on the potential rate of return that is lost or sacrificed when one alternative use of the asset is chosen over another.
a. Sunk cost
b. Opportunity cost
c. Target cost
d. Allocated cost

12. In a make or buy decision which of the following costs would be considered relevant?
a. Unavoidable costs.
b. Allocated costs.
c. Sunk costs.
d. Avoidable costs.

13. Which of the following is typically not important when calculating the net present value of a project?
a. Method of financing the project.
b. Timing of cash flows from the project.
c. Income tax effect of cash flows from the project.
d. Amount of cash flows from the project.

Solution Summary

The solution answers 4 multiple choice accounting question related to profit center, flexed budget performance report variance, opportunity cost, make or buy decision.