In the payback method, depreciation is added back to net operating income when computing the annual net cash flow. True or False The internal rate of return is computed by finding the discount rate that equates the present value of a project's cash outflows with the present value of its cash inflows. True or False The internal rate of return method assumes that the cash flows generated by the project are immediately reinvested elsewhere at a rate of return that equals the company's cost of capital. True or False An increase in the expected salvage value at the end of a capital budgeting project will increase the internal rate of return for that project.TrueFalse The minimum required rate of return is the discount rate that makes the net present value of the project equal to zero.TrueFalse The production budget is typically prepared before the direct materials budget.TrueFalse The selling and administrative budget is typically prepared before the cash budget.TrueFalseA benefit from budgeting is that it forces managers to think about and plan for the future.TrueFalseOne of the weaknesses of budgets is that they are of little value in uncovering potential bottlenecks.TrueFalse One disadvantage of budgeting is that budgeting makes it more difficult to coordinate the activities of the entire organization.TrueFalse The direct labor budget shows the direct labor-hours required to satisfy the production budget.TrueFalse In the manufacturing overhead budget, the non-cash charges (such as depreciation) are deducted from the total budgeted manufacturing overhead to determine the expected cash disbursements for manufacturing overhead.TrueFalse The manufacturing overhead budget lists all costs of production other than direct materials and direct labor.TrueFalse The selling and administrative expense budget lists all costs of production other than direct materials and direct labor.TrueFalse The budgeted variable selling, and administrative expense is calculated by multiplying the budgeted unit sales by the variable selling and administrative expense per unit.TrueFalse Waste on the production line will result in an unfavorable materials price variance.TureFalse Material price variances are often isolated at the time materials are purchased, rather than when they are placed into production, to facilitate earlier recognition of variances.TrueFalse

The payback period alludes to the measure of time it takes to recoup the cost of an investment.…

Answered: In the payback method, depreciation is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

In the payback method, depreciation is added back to net operating income when computing the annual net cash flow. True or False

The internal rate of return is computed by finding the discount rate that equates the present value of a project's cash outflows with the present value of its cash inflows.

True or False

The internal rate of return method assumes that the cash flows generated by the project are immediately reinvested elsewhere at a rate of return that equals the company's cost of capital. True or False

An increase in the expected salvage value at the end of a capital budgeting project will increase the internal rate of return for that project.
True
False

The minimum required rate of return is the discount rate that makes the net present value of the project equal to zero.
True
False

The production budget is typically prepared before the direct materials budget.
True
False

The selling and administrative budget is typically prepared before the cash budget.
True
False
A benefit from budgeting is that it forces managers to think about and plan for the future.
True
False
One of the weaknesses of budgets is that they are of little value in uncovering potential bottlenecks.
True
False

One disadvantage of budgeting is that budgeting makes it more difficult to coordinate the activities of the entire organization.
True
False
The direct labor budget shows the direct labor-hours required to satisfy the production budget.
True
False

In the manufacturing overhead budget, the non-cash charges (such as depreciation) are deducted from the total budgeted manufacturing overhead to determine the expected cash disbursements for manufacturing overhead.
True
False

The manufacturing overhead budget lists all costs of production other than direct materials and direct labor.
True
False

The selling and administrative expense budget lists all costs of production other than direct materials and direct labor.
True
False

The budgeted variable selling, and administrative expense is calculated by multiplying the budgeted unit sales by the variable selling and administrative expense per unit.
True
False

Waste on the production line will result in an unfavorable materials price variance.
Ture
False

Material price variances are often isolated at the time materials are purchased, rather than when they are placed into production, to facilitate earlier recognition of variances.
True
False

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