A Firm with Total Asset Turnover Lower Than the Industry

question 78

Multiple Choice

A firm with total asset turnover lower than the industry average may have

• A)excessive debt.
• B)excessive cost of goods sold.
• C)insufficient sales.
• D)insufficient fixed assets.
• E)none of the above

---

Definitions:

Variable Overhead

Costs that fluctuate with the level of production or business activity, such as utilities or raw materials.

Rate Variance

The difference between the expected standard cost and the actual cost incurred, calculated for direct labor rate, overhead rate, or material price.

Standard Direct Labor-Hours

The estimated hours required to produce a units based on standard efficiency and productivity levels.

Labor Efficiency Variance

The difference between the actual hours worked to produce a good or service and the standard hours expected, multiplied by the standard labor rate.