Other Things Held Constant,if a Firm Is Operating at a Profit

question 111

True/False

Other things held constant,if a firm is operating at a profit and then sales increase,the degree of operating leverage will decline.

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Definitions:

Direct Labour

The wages and other compensation paid to employees who are directly involved in producing goods or providing services.

Labour Rate Variance

The difference between the actual cost of labor and the expected (or standard) cost of labor for the actual production level.

Labour Efficiency Variance

A measure used in accounting to indicate the difference between the actual number of labor hours used and the standard number of hours that should have been used, multiplied by the standard labor rate.

Variable Overhead

Costs that vary with the level of production or business activity, such as utilities and indirect materials, but do not directly correlate to direct labor or materials.