Multiple choice

1. The difference between a budget and a standard is that 

A) a budget expresses what costs were, while a standard expresses what costs should be. 

B) a budget expresses management’s plans, while a standard reflects what actually happened. 

C) a budget expresses a total amount, while a standard expresses a unit amount. 

D) standards are excluded from the cost accounting system, whereas budgets are generally incorporated into the cost accounting system. 

2. A disadvantage of the cash payback technique is that it 

A) ignores obsolescence factors. 

B) ignores the cost of an investment. 

C) is complicated to use. 

D) ignores the time value of money. 

3. The total materials variance is equal to the 

A) materials price variance. 

B) difference between the materials price variance and materials quantity variance. 

C) product of the materials price variance and the materials quantity variance. 

D) sum of the materials price variance and the materials quantity variance. 

4. The cash payback technique 

A) considers cash flows over the life of a project. 

B) cannot be used with uneven cash flows. 

C) is superior to the net present value method. 

D) may be useful as an initial screening device.