All Other Things Equal, a Company Can Increase Its Operating

question 186

Multiple Choice

All other things equal, a company can increase its operating leverage by converting

• A)fixed costs to variable costs.
• B)variable costs to fixed costs.
• C)period costs to product costs.
• D)product costs to period costs.

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Definitions:

Labor Rate Variance

A financial measure that compares the actual cost of labor to the expected or standard cost, indicating how well a company manages its labor expenses.

Labor Efficiency Variance

A measure of the difference between the actual hours worked by employees and the expected hours worked, multiplied by the standard labor rate.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (or standard) costs based on the predetermined overhead rate.

Month

A unit of time, roughly based on the period of the lunar cycle, used in calendars to divide the year.