The Method of Analyzing Capital Investment Proposals That Divides the Estimated

question 167

Multiple Choice

The method of analyzing capital investment proposals that divides the estimated average annual income by the average investment is:

• A) cash payback method
• B) net present value method
• C) internal rate of return method
• D) average rate of return method

---

Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (or standard) cost allocated to production, based on the standard variable overhead rate.

Labor Rate Variance

The difference between the actual cost of labor and the expected (or standard) cost, used to measure the efficiency and cost management in labor use.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain amount of output, multiplied by the standard labor rate.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected overhead based on standard rates.