Financial Leverage Is Typically More Under the Control of Management

question 65

True/False

Financial leverage is typically more under the control of management than is operating leverage because the nature of the product often dictates the type of production process needed.

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Definitions:

Variable Manufacturing Overhead

Costs in the production process that fluctuate with the volume of production, such as utilities for the machinery.

Direct Labour Hours

The total hours worked by employees that are directly involved in the manufacturing or production process.

Standard Cost

Standard cost refers to the predetermined cost of manufacturing a single unit or a number of units of product under current or anticipated operating conditions.

Standard Quantity

The predetermined amount of materials, labor, or overhead that should be used in the production process, serving as a benchmark for measuring efficiency.