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    Performance Evaluation Purposes

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    For performance evaluation purposes, the variable costs of a service department should be charged to operating departments using:

    1- the actual variable rate and the budgeted level of activity for the period.
    2- the budgeted variable rate and the actual level of activity for the period.
    3- the budgeted variable rate and the budgeted level of activity for the period.
    4- the actual variable rate and the peak-period or long-run average servicing capacity.

    Suture Corporation's discount rate is 12%. If Suture has a 5-year investment project that has a project profitability index of zero, this means that:

    1 the net present value of the project is equal to zero.
    2 the internal rate of return of the project is equal to the discount rate.
    3 the payback period of the project is equal to the project's useful life.
    4 both 1 and 2 above are true.

    If the net present value of a project is zero based on a discount rate of 16%, then the internal rate of return is:

    1 equal to 16%.
    2 less than 16%.
    3 greater than 16%.
    4 cannot be determined from this data.

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    https://brainmass.com/business/capital-budgeting/managerial-accounting-256093

    Solution Preview

    For performance evaluation purposes, the variable costs of a service department should be charged to operating departments using:

    1- the actual variable rate and the budgeted level of activity for the period.
    2- the budgeted variable rate and the actual level of activity for the period. < = Answer. For performance evaluation, ...

    Solution Summary

    Performance evaluation purposes for variable costs of a service department operating department is determined.

    $2.19

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