What Is the Key Difference Between Historical PER and Prospective

question 33

Multiple Choice

What is the key difference between Historical PER and Prospective PER?

• A) Historical PER uses last year's earnings but Prospective PER focuses on next year's earnings and dividend.
• B) Historical PER uses earnings in year 0 but Prospective PER focuses on current earnings.
• C) Historical PER uses average past earnings but Prospective PER focuses on current earnings.
• D) Historical PER uses earnings in years 1 and 2 but Prospective PER focuses on next year's earnings.

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Definitions:

Variable Manufacturing Overhead

Costs in manufacturing that vary with the level of production output, such as utilities or indirect material costs, but do not include direct materials or direct labor.

Labor Efficiency Variance

The difference between the actual hours worked and the expected hours worked, multiplied by the standard hourly labor rate.

Variable Overhead Efficiency Variance

This term measures the efficiency with which variable overhead resources are utilized in the production process.

Shipping Container Refurbishment

The process of repairing and restoring shipping containers to extend their usability and lifecycle.