EVPI Is Always Greater Than or Equal to EVSI

question 8

True/False

EVPI is always greater than or equal to EVSI.

---

Definitions:

Direct Labour Hour

A measure of labor that directly contributes to the production of goods, used in calculating labor costs and efficiency.

Manufacturing Overhead

All manufacturing costs that are not directly associated with the production of a product, including costs related to indirect materials, indirect labor, and other indirect expenses.

Overapplied Overhead

This occurs when the overhead allocated to products or job orders during a period exceeds the actual overhead costs incurred.

Manufacturing Overhead

Indirect costs associated with manufacturing, not directly tied to specific product units, such as equipment maintenance, factory rent, and management salaries.