Which of the Following Statements About Economic Value Added (EVA)is

question 12

Multiple Choice

Which of the following statements about economic value added (EVA) is true?

• A)EVA is one of the best ways to answer the question, "Are we providing our customers with expected value?"
• B)EVA is the amount by which profits (after expenses)exceed the cost of capital in a given year.
• C)EVA is only useful to top managers.
• D)The final step in calculating EVA is to compute the net operating profit after taxes.
• E)All of these statements about economic value added are true.

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Definitions:

Plantwide Predetermined Manufacturing Overhead Rate

A single overhead rate calculated for an entire manufacturing plant, applied to all jobs or products to allocate manufacturing overhead costs.

Machine-Hours

Machine-Hours indicate the total hours that machinery is operating during a specific period of time.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, such as utilities, maintenance, and management salaries.

Markup

The sum added to the purchase price of products to account for overhead costs and profit, setting the sales price.