The Best Way for a Firm to Avoid Serious Cash

question 267

True/False

The best way for a firm to avoid serious cash flow problems is to sustain a rapid growth in sales.

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Definitions:

Standard Costing

A cost accounting system that assigns a fixed cost to inventory with the variance analyzed to improve cost control and management decisions.

Labour Efficiency Variance

The difference between the actual hours worked and the standard hours expected to be worked, multiplied by the standard labor rate.

Variable Overhead

Refers to the costs of production that fluctuate with the level of output, such as utilities and raw materials.

Labour Rate Variance

The difference between the actual cost of direct labor and the expected (or budgeted) cost.