Today’s question: BEC

The discount rate (hurdle rate of return) must be determined in advance for the

A)   Payback period method.

B)   Time adjusted rate of return method.

C)   Net present value method.

D)   Internal rate of return method.

Correct Answer: C

Explanation: The Net Present Value method discounts future cash flow benefits using the cost of capital as the discount rate.

The payback period method does not employ a discount rate. "Time adjusted rate of return method" and "Internal rate of return method" are incorrect as they are the same method and it solves for the discount rate which equates the investment cost and the future cash benefits.

Today's question: AUD

Which of the following internal control activities most likely would prevent direct labor hours from being charged to manufacturing overhead?

A)   Periodic independent counts of work in process for comparison to recorded amounts

B)   Comparison of daily journal entries with approved production orders

C)   Use of time tickets to record actual labor worked on production orders

D)   Reconciliation of work-in-process inventory with periodic cost budgets