Which Analysis Deals with Comparing Items in a Financial Report

question 75

Multiple Choice

Which analysis deals with comparing items in a financial report by expressing each item as a percentage of a certain base total?

• A) Vertical analysis
• B) Ratio analysis
• C) Trend analysis
• D) Common-size statement

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Definitions:

Materials Quantity Variance

A measure of the difference between the actual quantity of materials used in production and the expected quantity, multiplied by the standard cost per unit.

Materials Price Variance

The deviation from the standard to the real price of materials, calculated by multiplying this difference by the amount of materials bought.

Variable Overhead

Overhead costs that vary directly with the level of production or activity, such as electricity or material handling costs.

Direct Material

Raw materials that can be directly traced to the production of a specific product and are a significant component of its cost.