Which of the Following Is NOT Considered Regarding the Purchase

question 98

Multiple Choice

Which of the following is NOT considered regarding the purchase of new equipment when looking at the net income under each alternative?

• A)annual sales
• B)depreciation expense per year on the new equipment
• C)differential labor costs
• D)additional fixed costs under an alternative

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard cost allocated, based on the actual activity level.

Variable Overhead Standards

The predetermined costs associated with variable overheads that are expected to be incurred under normal operating conditions.

Direct Labor-hours

The total hours worked directly on manufacturing a product or providing a service, used as a basis for allocating labor costs in product costing.

Quantity Standard

Pre-determined measure set for the amount of input that should be used in producing a unit of output.