The Controller of Excello Manufacturing,Inc

question 12

Multiple Choice

The controller of Excello Manufacturing,Inc.,wants to use ratio analysis to identify the possible existence of idle equipment or the possibility that equipment has been disposed of without having been written off.Which of the following ratios would best accomplish this objective?

• A) Depreciation expense/book value of manufacturing equipment.
• B) Accumulated depreciation/book value of manufacturing equipment.
• C) Repairs and maintenance cost/direct labor costs.
• D) Gross manufacturing equipment cost/units produced.

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Definitions:

Excavation

The process of digging or removing earth, typically for the purpose of discovering archaeological remains or for construction.

Binding Decision

A final and enforceable ruling or agreement that must be followed by the parties involved.

Mandatory Arbitration Clause

A provision in a contract requiring the parties to resolve disputes through arbitration, rather than through litigation.

Waived

Means voluntarily giving up a known right, claim, or privilege.