Which of the Following Is a Reason for Not Increasing

question 62

Multiple Choice

Which of the following is a reason for not increasing a business's financial leverage?

• A) It can have a positive impact on the business's return on equity.
• B) The business can be grown with someone else's money.
• C) The interest on debt has a deductible nature.
• D) It may lead to an inability to pay the interest on the debt.
• E) It decreases a business's overall risk.

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Definitions:

Total Labor Variance

The difference between the actual cost of labor and the budgeted or standard cost of labor over a period.

Total Overhead Variance

The difference between actual overhead costs incurred and overhead costs allocated to production, based on standard rates, during a specific period.

Direct Labor Price Variance

A measure of the difference between the actual cost of direct labor and the standard cost of direct labor multiplied by the actual hours worked.

Direct Labor Hours

The total hours worked by employees directly involved in manufacturing a product or providing a service, often used to allocate labor costs to products or services.