A Business Has to Increase Its Sales Annually to Net

question 42

Multiple Choice

A business has to increase its sales annually to net as much as it did in the previous year when

• A)profits are rising as fast as sales.
• B)profits are not rising as fast as sales.
• C)sales are trending upward.
• D)sales and profits are trending down at the same rate.

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Definitions:

Direct Materials Price Variance

The difference between the actual cost of direct materials and the expected (or standard) cost, used in manufacturing and budgeting.

Direct Materials Quantity Variance

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

Total Cost Variance

The overall difference between the actual costs incurred and the standard or budgeted costs, across all categories of expenses.

Variable Factory Overhead

Costs of manufacturing that vary with the level of production output, such as utility costs for machinery.