Multiple Choice Answers

In deciding whether to accept business at a special price, the short- run price should be set high enough to cover all costs and expenses, plus provide a reasonable amount for profit.

True
False

A factor in determining the rate of return on investment-the ratio of sales to invested assets-is called:

a. profit margin
b. indirect margin
c. investment turnover
d. cost ratio

Budgetary slack can be avoided if lower and mid-level managers are requested to support all of their spending requirements with specific operational plans.

True
False

Differential revenue is the amount of increase or decrease in revenue expected from a particular course of action as compared with an alternative.

True
False

The following data relate to direct materials costs for November:
Actual costs 4,500 pounds at $6.00
Standard Costs 4,600 pounds at $5.50
What is the direct materials quantity variance?
a. $550 unfavorable
b. $600 favorable
c. $550 favorable
d. $600 unfavorable