Changes in the Profit Margin Ratio Could Indicate Changes in Any

question 44

Multiple Choice

Changes in the profit margin ratio could indicate changes in any of the following except changes in

• A)The company's pricing practices
• B)The company's sales volume
• C)The company's costing structure
• D)The profitability of the company's product
• E)None of these

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Definitions:

Direct Labor Standards

These standards define the amount of time and the rate of pay anticipated for direct labor required to manufacture a product or provide a service.

Actual Direct Labor Cost

Actual direct labor cost is the total amount of money paid for the wages of laborers directly involved in the production of goods or services.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours allowed, multiplied by the standard labor rate, indicating efficiency in labor usage.

Direct Labor Standards

The predetermined amount of labor time and cost that it should ideally take to produce one unit of a product, used for budgeting and performance evaluation.