Value That Is Created Should Not Be Claimed

question 44

True/False

Value that is created should not be claimed.

Compute variable overhead rate and efficiency variances.

Analyze favorable and unfavorable variances and understand their implications.

Apply overhead to products based on direct labor-hours or machine-hours.

Understand how standard cost systems work in manufacturing settings.

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Definitions:

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated as the net profit divided by the cost of investment.

Markup

The amount added to the cost of a product to cover expenses and generate profit, often expressed as a percentage of the cost.

Absorption Costing

An approach in accounting that involves adding all production-related costs, whether stable or variable, into the product’s final price.

Cost-plus Pricing

A pricing strategy where a fixed percentage or amount is added to the cost of producing a product to determine its selling price.