Multiple choice

1. An unfavorable materials quantity variance would occur if 

A) more materials were purchased than were used. 

B) actual pounds of materials used were less than the standard pounds allowed. 

C) actual labor hours used were greater than the standard labor hours allowed. 

D) actual pounds of materials used were greater than the standard pounds allowed. 

2. The labor price variance is 

A) (AH x AR) – (SH x SR). 

B) (AH x AR) – (AH x SR). 

C) (AH x SR) – (SH x SR). 

D) (AH x SR) – (SH x AR). 

3. The labor quantity variance is 

A) (AH x AR) – (SH x SR). 

B) (AH x AR) – (AH x SR). 

C) (AH x SR) – (SH x SR). 

D) (AH x SR) – (SH x AR). 

4. Which of the following ignores the time value of money? 

A) Internal rate of return 

B) Profitability index 

C) Net present value 

D) Cash payback