Discounted Cash Flow Methods,such as Net Present Value and Internal

question 42

Multiple Choice

Discounted cash flow methods,such as net present value and internal rate of return,________.

• A) use simple interest calculations
• B) use net income amounts rather than cash flows
• C) focus on the payback period
• D) consider discounted cash flows

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Definitions:

Efficiency Variance

The difference between the actual input used in production and the standard input that was expected to be used.

Spending Variance

The difference between the actual amount spent and the budgeted amount for a category or period, indicating over or underspending.

Quantity Variance

The difference between the actual quantity of materials or labor used in production and the expected (or standard) quantity.

Overhead Cost Variance

The difference between the actual overhead costs incurred and the standard or expected overhead costs.