Management Would Generally Expect Unfavorable Variances If Standards Were Based $\underline{\text{Ideal}} ~~~~~~~~\underline{\text{Practical}} ~~~~~~~~~~~\underline{\text{Expected annual}}$

question 86

Multiple Choice

Management would generally expect unfavorable variances if standards were based on which of the following capacity measures? $\underline{\text{Ideal}} ~~~~~~~~\underline{\text{Practical}} ~~~~~~~~~~~\underline{\text{Expected annual}}$

• A)yes no no
• B)no no no
• C)no yes yes
• D)yes yes no

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Definitions:

Accounts Receivable Turnover

This ratio measures how efficiently a company collects revenue from its customers by dividing total sales by the average accounts receivable during a specific period.

Credit Sales

Sales transactions where the payment is deferred to a future date, essentially extending credit to the purchaser.

Credit Period

The amount of time allowed by a seller for a buyer to pay for goods or services received, typically expressed in days.

Operating Cycle

The time period between the acquisition of inventory and when cash is collected from receivables.