Total Asset Turnover

question 6

Multiple Choice

Total asset turnover:

• A)determines the speed with which a company can turn its assets into cash to meet debts.
• B)compares current (short-term)assets to current liabilities.
• C)measures the most valuable asset of a company.
• D)measures the amount of inventory that is required by a company at any point of time.
• E)measures how well an organization uses all of its assets in creating sales.

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Definitions:

Materials Price Variance

The difference between the actual cost of materials purchased and the expected (or standard) cost, multiplied by the quantity of materials purchased.

Standard Quantity

The expected amount of materials or inputs required to produce a single unit of product under normal conditions.

Actual Materials Purchased

The total quantity and cost of raw materials bought by a company for production during a specific period.

Standard Price

A predetermined cost assigned to materials, labor, and overhead for budgeting and cost-control purposes.