The Plant Manager Can Improve EVA By

question 4

Multiple Choice

The plant manager can improve EVA by:
I. increasing earnings
II. increasing capital employed
III. reducing earnings
IV. reducing capital employed

• A) I and II only
• B) II and III only
• C) III and IV only
• D) I and IV only

---

Definitions:

Machine-Hours

A measure of production volume expressed in the total hours machines are operated within a given period.

Budget Variance

The difference between what was budgeted or forecasted and what was actually achieved, indicating over or underperformance.

Predetermined Overhead Rate

A calculated rate used to apply manufacturing overhead to products or job orders, based on a related activity measure such as labor hours.

Variable Manufacturing Overhead

The costs that vary with production volume, such as indirect materials, utilities, and labor involved in the manufacturing process.