Common Size Financial Statements Make It Easier to Compare Firms

question 78

Multiple Choice

Common size financial statements make it easier to compare firms

• A)of different sizes.
• B)in different industries.
• C)with different degree of leverage.
• D)that use different inventory valuation methods (FIFO vs.LIFO).

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Definitions:

Standard Costing

An accounting method that uses predetermined costs for product costing, performance evaluation, and decision making.

Labour Efficiency Variance

A metric that measures the difference between the actual labor hours used in production and the standard or expected hours, often indicating labor performance.

Variable Overhead

Indirect production costs that fluctuate with the level of production output, such as utilities for the manufacturing plant.

Labour Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, based on the standard rate times the actual hours worked.