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The Accounting Method That Is Used for Stock Appreciation Rights

question 18

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The accounting method that is used for stock appreciation rights (SARs) compensation plans is similar to the accounting procedures that can be used for


Definitions:

Labor Efficiency Variance

measures the difference between the actual hours worked to produce goods and the standard hours expected, multiplied by the standard labor rate.

Direct Labor-Hours

The hours worked by employees directly involved in the production process.

Variable Overhead Efficiency Variance

A metric that measures the difference between the actual hours taken to produce something and the expected (standard) hours, multiplied by the variable overhead rate per hour.

Standard Machine-Hours

The allocated number of operating hours expected for machinery to achieve a set level of production under standard conditions.

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