The Economic Value Added (EVA) Method of Assessing Performance Involves

question 10

Multiple Choice

The economic value added (EVA) method of assessing performance involves:

• A) solely after tax profit.
• B) only the cost of capital.
• C) solely total capital employed.
• D) all of the above.

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Definitions:

Inventories

Assets held for sale, or in the process of being produced for sale, or to be used in the production process.

Overapplied Manufacturing Overhead

This occurs when the allocated manufacturing overhead cost is more than the actual manufacturing overhead costs incurred.

Underapplied Manufacturing Overhead

This occurs when the allocated manufacturing overhead costs are less than the actual overhead costs incurred, leading to a cost variance.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including both material and labor costs.