The Management of Zeta Fire Alarms Has Calculated the Following

question 9

Multiple Choice

The management of Zeta Fire Alarms has calculated the following variances: $$\begin{array} { | l | r | } \hline \text { Direct materials cost variance } & \$ 9,000 \mathrm { U } \\\hline \text { Direct materials efficiency variance } & 36,000 \mathrm {~F} \\\hline \text { Direct labor cost variance } & 15,000 \mathrm {~F} \\\hline \text { Direct labor efficiency variance } & 13,500 \mathrm { U } \\\hline \text { Total variable overhead variance } & 8,500 \mathrm {~F} \\\hline \text { Total fixed overhead variance } & 3,000 \mathrm {~F} \\\hline\end{array}$$ What is the total direct materials variance of the company?

• A)$1,500 F
• B)$27,000 F
• C)$11,500 F
• D)$6,000 F

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Definitions:

NPV

The calculation of the current value of all future cash flows generated by a project, after accounting for the initial capital expenditure.

IRR

Internal Rate of Return; a metric used in capital budgeting to estimate the profitability of potential investments.

Probability Distributions

A statistical function that describes all the possible values and likelihoods that a random variable can take within a given range.

Portfolio Theory

A body of thought aimed at forming investment portfolios that minimize risk for a given return.