Because of Its Complex Calculation, Few Managers Rely on the Payback

question 37

True/False

Because of its complex calculation, few managers rely on the payback period as a capital budgeting analysis tool.

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Definitions:

Materials Quantity Variance

A financial metric used in cost accounting to measure the difference between the actual quantity of materials used in production and the expected quantity.

Cost of Goods Sold

The immediate expenses related to the production of a company's sold goods, involving materials and labor.

Labor Efficiency Variance

Labor efficiency variance is a measure of the difference between the actual hours worked by employees versus the standard or expected hours worked to produce a certain amount of goods.

Labor Rate Variance

The difference between the actual cost of labor and the expected (or budgeted) cost, used in managerial accounting to monitor labor cost efficiency.