A Firm's Permanent Working Capital Refers to The

question 21

Multiple Choice

A firm's permanent working capital refers to the:

• A) difference between fixed assets and current assets.
• B) maximum difference between current assets and current liabilities.
• C) portion of net working capital that is financed from long-term sources.
• D) amounts that must be held to meet debt covenants.

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Definitions:

Standard Hours

The predetermined amount of time expected to complete a task or to produce a unit of output under normal conditions.

Standard Variable Overhead Rate

The predetermined rate at which variable overhead costs are expected to be incurred relative to a certain measure of activity, such as labor hours.

Direct Labour Hours

Direct Labour Hours represent the amount of time spent by workers directly involved in manufacturing a product or providing a service.

Variable Overhead

Indirect operating costs that change in proportion to the level of production or business activity.