If an Annuity Due and an Ordinary Annuity Have the Same

question 15

Multiple Choice

If an annuity due and an ordinary annuity have the same number of equal payments and the same interest rates, then

• A) the present value of the annuity due is less than the present value of the ordinary annuity.
• B) the present value of the annuity due is greater than the present value of the ordinary annuity.
• C) the future value of the annuity due is equal to the future value of the ordinary annuity.
• D) the future value of the annuity due is less than the future value of the ordinary annuity.

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Definitions:

Actual Direct Labor Hours

The real number of labor hours spent by workers directly involved in the production of goods or services.

Standard Hours

The prescribed amount of time that work is expected to take under normal conditions, often used for planning and efficiency analysis.

Direct Materials Quantity Variance

A measure used to evaluate the efficiency of the quantity of materials used in production, calculated as the difference between the standard cost of direct materials and the actual cost of direct materials used.

Actual Costs

The real expenditure incurred in the manufacturing or production of goods and services, as opposed to estimated costs.