Which One of These Statements Is Correct

question 21

Multiple Choice

Which one of these statements is correct?

• A) Market value added measures the difference between the total market value and the total book value of equity.
• B) Net income is also called economic value added.
• C) EVA measures the net profit of a firm after deducting the cost of the assets used in the production process.
• D) EVA considers the cost of long-term debt financing but excludes the cost of equity financing.

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Definitions:

Total Overhead Variance

The difference between the actual overhead costs incurred and the overhead costs that were applied or allocated based on standard costing procedures.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the quantity that should have been used, valued at the standard cost.

Direct Material

The raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the production cost.

Total Variance

The difference between the actual costs incurred and the standard costs, summarizing all variances in cost accounting to analyze overall performance.